The steep increase is despite the treasury’s decision extend the reduction in the general fuel levy by 75 cents a litre
Sapref has declared force majeure, citing the ongoing civil unrest and disruption to its supply routes.
The Durban-based refinery is the biggest in the country, accounting for 35% of fuel needs. It is also among the only four refineries still operational after two were forced to close last year.
In a notice sent out on Tuesday, Sapref said the riots that have swept across KwaZulu-Natal, triggered by protests over the jailing last week of former president Jacob Zuma for contempt of court, have caused suppliers of materials critical to its operations to suspend deliveries.
“Without said critical materials and with no clarity as to how long the unrest will last and normal supply resume, Sapref is unable to sustain refinery operations,” the notice said.
“Consequently, Sapref has been obliged to make the difficult decision to shut down the refinery. As a result of the foregoing, Sapref hereby declares the occurrence of an event of force majeure, excusing Sapref from performing under the agreement.”
The riots, initially believed to have been started by angry Zuma supporters in his home province of KwaZulu-Natal, have spread across parts of the country and taken the form of indiscriminate vandalism and looting.
The former president began a 15-month sentence last week after he was found in contempt of a Constitutional Court order to testify before the Zondo commission investigating state capture.
The riots come as South Africa’s weakened economy takes its toll on citizens, many of whom are at the mercy of spiralling unemployment — worsened by the Covid-19 pandemic and the attendant lockdowns — as well as poor service delivery and the high cost of living.
Earlier this week, in response to the violence, President Cyril Ramaphosa conceded that South Africa’s economic failings were at the heart of the current unrest, saying in a national address: “This moment has thrown into stark relief what we already knew: that the level of unemployment, poverty and inequality in our society is unsustainable.”
“We cannot expect a lasting and durable peace if we do not create jobs and build a more just and equitable society in which all South Africans can participate freely and equally,” he added.
The riots jeopardise the country’s economic recovery even further, as many businesses across the country — including Sapref — have been forced to shut down.
The temporary shutdown will no doubt worsen the country’s already compromised refinery capacity, with the Astron Energy refinery in Cape Town currently offline after a fire last year. Following a catastrophic explosion in December, the Engen refinery in Durban, which was owned by Petronas, was also shut.
The department of mineral resources and energy says each of South Africa’s refineries has an average of 1 000 workers who will be affected by any closures. The sector had a R360-billion turnover per year.
The refinery closures have meant that 40% of capacity has been offline, leaving the country increasingly dependent on petrol and diesel imports and making it more vulnerable to global price swings. Sapref’s closure comes in the wake of an oil diplomacy crisis likely to hurt consumers.
The effect of the South African unrest on the performance of the rand, which earlier this week plummeted by 2% to the dollar, may also trigger a hike in petrol prices, dealing yet another blow to the ailing economy.
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