A trade union and labour experts have welcomed the Central Energy Fund’s (CEF) acquisition of the Sapref Refinery in Durban, saying it will address refinery capacity shortages in South Africa.

The acquisition, approved by the Competition Commission, was confirmed by the Minister of Minerals and Petroleum Resources, Gwede Mantashe.

The Competition Commission said in a statement that they had approved the proposed transaction whereby the CEF intends to acquire assets that collectively comprise the Sapref Refinery.

Mantashe said the commission’s approval was the culmination of the conclusion of the Sale Purchase Agreement between BP Southern Africa and Shell Downstream South Africa (SDSA) and CEF. The sale includes the SDSA and BP SA interests in the Sapref land and other associated assets.

Mantashe added that the acquisition of these assets will form the hallmark of the CEF’s investment and growth strategy in the energy value chain.

“We have noted with concern the declining local refining capacity which resulted in the country becoming a net importer of refined petroleum products.

This new emerging trend was not only threatening the country’s economic stability and security of supply of petroleum products, but also meant the exportation of jobs that are so needed.

“The commission’s approval is important because it does not only authenticate the acquisition but reinforces South Africa’s concerted efforts aimed at guaranteeing adequate supply of liquid fuels in the midst of premature closures of refineries.”

Matthew Parks, acting national spokesperson for Cosatu, said the labour union welcomes this strategic acquisition by the government.

“It will help address refinery capacity shortages in our economy as well as reduce fuel costs, create badly needed jobs and support local value chains. It can also help reduce inflation as fuel prices are a major component of CPI.”

Parks added that it was critical that the government ensures good governance mechanisms are in place and adhered to at all times.

Professor Bonke Dumisa, an independent economic analyst, said he viewed the acquisition as an important move by the government.

“I do believe that a country does need an oil refinery. We previously had Shell and BP exporting raw crude oil and refining it to produce petroleum products. We have lost that ability in South Africa. We are now purchasing refined oil which is more expensive and in the long run there is a possibility of us running out of crude oil.”

Dr Sanele Gumede, an economics lecturer at the University of KwaZulu-Natal, also welcomed the news.

“We do need a refinery to treat raw crude oil. We need to be not just importers but also exporters of petroleum products, and this can only happen with our own refinery. If we look at countries like Nigeria who are looking to import refined oil we can fill that gap instead of them looking abroad. But government needs to manage the refinery effectively.

“My concern is we can’t allow Sapref to turn into a situation like how our State-owned enterprises are being run, constantly needing bailouts. We need effective management that will benefit the economy and create jobs.”

However Desmond D’Sa of the South Durban Community Environmental Alliance said he did not understand why the CEF purchased Sapref.

“The facility is old and the infrastructure is dilapidated. Why would you buy something that is going to cost so much money to get it running? Because of fossil fuels, most countries are closing refineries, and we are trying to reopen a broken-down refinery.”

The Mercury

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Central Energy Fund acquisition of Sapref refinery welcomed