summary

The policy divides the burden of safeguarding the country’s fuel security between the government and the private sector via a dual responsibility framework:

• • State Strategic Stocks (60 Days Cover):
    The government mandates a reserve equivalent to 60 days of net imports. This will be managed by the newly consolidated South African National Petroleum Company (SANPC)—which emerged from the 2025 merger of the Strategic Fuel Fund (SFF), PetroSA, and iGas. These reserves will consist of 70% crude oil and 30% refined products (petrol, diesel, jet fuel) kept at state-owned storage hubs like Saldanha Bay and Milnerton.
  • Private Mandatory Stocks (21 Days Cover):
    In a major shift, all licensed private wholesalers and fuel importers will be legally required to maintain 21 days of net import cover at their own expense. This stock must also follow a 70% crude and 30% finished product split to ensure quick market liquidity during disruptions.
  • Product Quality Management:
    Because refined petroleum degrades over time, all stored finished products must be rotated at least every three months.

The draft policy establishes four distinct action triggers based on the severity of a fuel shortage. Notably, it grants the Minister of Mineral and Petroleum Resources the sole authority to declare a liquid fuels emergency and alter market distributions:

Maintaining millions of barrels of emergency fuel requires massive capital. The policy proposes introducing a dedicated “security of supply” financial instrument or a cost-recovery framework via the Central Energy Fund Act to fund the state’s procurement and rotational costs. Additionally, it prioritises the refurbishment of the Saldanha Bay storage terminal and building new refined product mega-tanks closer to inland demand centres like Gauteng.

The Reality:
South Africa has experienced a massive shift in its energy security. Major domestic refineries, such as SAPREF and ENGEN, have either closed down or been converted into import terminals.

The Vulnerability:
We have transitioned from a nation that imports raw crude oil and refines it locally to a nation that relies heavily on importing already finished petroleum products (like petrol and diesel). This leaves our entire economy exposed to international shipping delays, geopolitical conflicts, and currency drops.

The Risk:
Government data indicates that a total national unavailability of liquid fuel would cost South Africa’s economy an estimated R1 Billion per day in lost Gross Domestic Product (GDP).

Currently, South Africa operates largely on a voluntary, commercial “just-in-time” fuel delivery model managed by private companies. This keeps corporate profits optimised but leaves the country with low physical reserves. This policy officially transitions South Africa into a regulated, mandatory regime where both the state and private businesses are legally forced to store massive volumes of backup fuel specifically for catastrophic disruptions.

Yes, but only in an extreme crisis. The draft policy introduces a strict three-level emergency trigger system.

The Trigger:
Fuel rationing will only be legally implemented under a Level 3 National Emergency. This is defined as a severe global supply shock or total failure of the import value chain that wipes out more than 50% of South Africa’s fuel supply.

The Action:
During a Level 3 emergency, the state will execute a mass drawdown of strategic stocks and legally enforce fuel rationing across the country to keep essential services running.

There are two opposing impacts on pricing built into this policy:

1. Potential Price Hikes:
The policy forces private oil companies and wholesalers to build infrastructure and store 21 days of backup fuel at their own expense. It also proposes a new state “cost-recovery framework” or financial instrument to fund government reserves. There is a strong likelihood that these heavy compliance costs will be passed down to ordinary citizens through higher retail fuel margins.

2. Potential Price Relief (The $145 Trigger):
|Conversely, the policy creates an Economic/Price Stability Trigger. If global oil price volatility spikes and Brent Crude threatens to hit $145 per barrel, the Minister can release state fuel reserves into the market via a competitive auction specifically designed to force down local pump prices.

If you are a licensed fuel manufacturer, wholesaler, or importer in South Africa, you will no longer be allowed to hold only what you intend to sell immediately. You will be legally mandated to maintain 21 days of net import cover as a private reserve. Furthermore, this backup stock cannot just be raw oil; it must be split 70% crude oil and 30% finished, refined product (like petrol or diesel) to ensure immediate market liquidity if a crisis hits.

Yes, refined petroleum products degrade. To counter this, the policy explicitly mandates a quality control rotation mechanism. All private and state-owned refined strategic stocks must be completely rotated at least every three months and must be stored close to operational facilities to make this logistically viable.

The Regulator:
The Minister of Mineral and Petroleum Resources holds the ultimate executive authority to declare an emergency and trigger the release or sale of the fuel.

The Custodian:
The day-to-day procurement, maintenance, and infrastructure management will be handled by the South African National Petroleum Company (SANPC). The SANPC is a new state entity formed by consolidating the Strategic Fuel Fund (SFF), PetroSA, and iGas.

The Logistics:
Transnet Pipelines and Freight Rail will be responsible for moving the emergency fuel via the 700km Multi-Product Pipeline (MPP) from coastal storage hubs (like Saldanha Bay) to inland economic centres like Gauteng. In an emergency, Transnet is legally required to prioritise strategic fuel over commercial cargo.

Crude oil reserves will continue to be heavily focused at the massive state-owned storage facility in Saldanha Bay. However, because 60% of South Africa’s fuel is consumed inland (Gauteng, Limpopo, Free State, and North-West), the policy prioritises building new “mega-tank” storage infrastructure and strategic hubs closer to these high-demand inland centres for refined products.