Saturday December 16, 2017

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Dept of Energy

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All petroleum products consumed in the country are imported from the Durban refineries in South Africa by the oil companies.The oil companies distribute the products to filling stations and to commercial users. The Ministry in consultation with key stakeholders is also looking into the logistics of importing products through Mozambique to diversify the sources of fuel supply with the aim of enhancing security of supply in the country. One oil company is currently importing through Mozambique on intermittent basis.

For Swaziland the situation is that all petroleum products are presently imported from South Africa where there is a regulation of product prices. The Ministry plays a regulatory role in the petroleum downstream activities, in particular the pricing of all controlled petroleum products i.e. petrol, diesel and illuminating paraffin. The government's objective to keep petroleum prices affordable to the public is undermined by the volatility in international oil prices and the Lilangeni/Dollar exchange rate which the government has no control over.

The Ministry also regulates the number of service stations in the country through the Petrol Rationalisation Committee, which achieves its role through the Service Station Rationali

sation Plan (RATPLAN). At the moment the Ministry is working on the Petroleum Bill and the RATPLAN is being reviewed to have it incorporated into the Petroleum Bill so that it is enforceable in law.

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The Ministry is investigating ways of making sure that fuel prices remain affordable for both industrial and domestic use. One strategy is the amendment of the Fuel Oil Levy Act of 1979. This will look at how the Strategic Oil Reserve Fund can be best managed so that in a situation of high international crude oil prices, the fund could be used to reduce the accumulated negative slate balance avoiding high fuel price increases. Additionally, the Ministry will investigate the option of importing refined products using other alternative routes for security of supply reasons.

In the short term the department will also concentrate on the following:

  • Consolidating all relevant petroleum legislation into a Petroleum Act,
  • Developing mechanisms for ensuring diversification of the sources of petroleum products imported into the country,
  • Establishing national strategic depots for petroleum products sufficient to sustain the economy for a maximum of 90 days,
  • Developing models for fair calculation of oil industry and dealer margins.
  • Investigating means of achieving least cost retail prices of LPG and paraffin,
  • Developing and implementing quality control measures that will ensure that marketers of oil products adhere to agreed product specifications-including environmental considerations-and that these conform to regional and/or international standards,
  • Developing legislation to ensure that all stakeholders in the oil and transport industry manage their waste oil in an environmentally friendly manner; and
  • Introducing safety standards for LPG and paraffin equipment.


Petroleum Act

The Ministry is in the process of updating, amending and consolidating existing pieces of legislation on petroleum, in line with the National Energy Policy to produce an all-embracing and comprehensive petroleum act: The Petroleum Act will address the following issues:

  • Regulation and deregulation of the oil industry
  • Ensuring adequate product availability in rural areas
  • Ensuring stable and reliable product availability for the country’s economy
  • Achieving regional competitiveness and fair pricing of petroleum fuels
  • Encouraging meaningful and sustainable participation of locals in the industry
  • Imposition of levies and taxes on petroleum products;
  • Administration of the Strategic Oil Reserve Fund; and
  • Provision of information concerning motor vehicles.

Consultations with key stakeholders in the fuel sector locally, and in the SACU region have taken place and a draft framework of the Legislation is now in place. It is expected that by mid September 2009, a draft Petroleum Bill will be submitted to Parliament.
Fuel Storage

The Energy policy of the country requires that all Oil Companies establish minimum stocks. Each company is required to store a minimum quantity of stocks.Fuel storage for petrol and diesel continues to be a major concern to the Government. Petroleum fuel storage capacity in Swaziland currently stands at less than 5 days. It is unacceptable for any country to have such a low storage capacity especially if it is land-locked and most of the fuel travels by trucks.The Ministry has completed a feasibility study for the strategic stocks and a site investigation in 2006, and 2008 respectively. The study amongst other findings identified Phuzumoya is a suitable site for both under ground and above ground alternatives. The Ministry is now working on the possible options of financing the construction of the depot.

The Ministry is looking into partnering with a private investor in order to retain control over the supply of petroleum products. Further, the Ministry is working on establishing a National Oil Company that will also participate in the procurement and distribution of fuel, hence protecting the interests of the public and further enhancing security of supply.

Potential Sources of Financing

  • For the country, investing in a strategic storage facility will be a major undertaking requiring exploring alternative means of financing
  • The two major components, capital expenditure and the stocks of products, should probably be considered separately when it comes to financing
  • Operation of the storage facilities as such may also be a matter to separate consideration
  • The question of ownership of the facilities and possible private participation in these will be a basic premise for the type and sources of financing
  • BOT (Build Operate Transfer) / BOOT (Build-Operate-Own-Transfer) arrangement is conceivable
  • But although the Government wishes to move towards private participation in the different sectors of the economy, it also wishes to retain control over the supply of petroleum products, which has implications for the question of ownership.


Petroleum Pipeline and refinery


Studies to construct a pipeline in parallel with the natural gas pipeline or along the railway line from Maputo to Phuzumoya need to be conducted. The Petroleum pipeline will be designed to bring all the imported petrol, diesel and illuminating paraffin. Investigation on the Establishment of a refinery would also be conducted.

Fuel Marking and Quality Assurance Programme

Fuel Marking project was initiated on October 2004 with an aim of monitoring the quality of fuel in the country and the reduction in revenue due to the constant decline in the fuel volumes.
The key objectives of the project are as follows:

  • Assessment of whether there are illegal activities in the countries fuel supply chain; if so, where is it occurring.
  • Introduce relevant control measures and data reporting systems once based on the results of objective 1.
  • Deter malpractice and thus increase legal fuel sales.


The project presents the following benefits:

  • Control and understanding of fuel movements in the country.
  • Ensure fuel quality and standards adherence.
  • Prompt and precise volume import data which might be useful for customs duty and tax calculations.
  • Discourage illegal activities in the fuel chain such as blending the conventional fuels with low tax paraffin and fuel dumping.


It has been observed that since the inception of the project, there has been better monitoring and understanding of the fuel industry. The project has identified other areas in the petroleum sector where there is malpractice and that need tighter controls.

The Ministry would like to convert this project into a comprehensive programme that will test the quality of the fuel that is imported as well as monitor fuel imports and distribution through trucks and trains to ensure that all fuel destined for Swaziland reaches its final destination and no fuel is stolen and sold illegally around the country. This will assist Government and other stakeholders in realising the revenue that is due to them.

A new fuels laboratory has been established by the Ministry to assist in this exercise. Testing equipment has been purchased and the parameters that will be tested include water content, sulphur levels, lead content, octane levels etc, to ensure that the fuel imported is as per specification. These specifications will soon be adopted and legalised in Swaziland through the Swaziland Standards Authority. This exercise, along with the development of a Petroleum Act, will assist Government in enforcing compliance in the petroleum industry.

HANDLING OF LPG AND PARAFFIN

HANDLING PETROL AND DIESEL

PRESS RELEASE ON FUEL PRICES - DECEMBER 2017

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