The South African fuel industry yesterday sounded the alarm over the potential for a crisis in aviation fuel supplies, urging the SA Revenue Service (SARS) to extend the existing time-bound licences for jet fuel imports.
This plea comes on the heels of a drawn-out review of the Customs and Excise Act, which has yet to align with the current dynamics of the industry.
In a statement yesterday, SARS clarified that it was not responsible for the industry's shortcomings in meeting the licensing requirements outlined in the Customs and Excise Act.
“There are two sides to every story,” said Phila Mzamo, spokesperson for the Fuel Industry Association of South Africa (FIA).
“The Act does not provide for changes in the industry; for example, it lacks transition mechanisms to special storage warehouse (SOS) status.”
The urgency of the situation has been amplified by recent developments in KwaZulu-Natal, where the closure of the Engen and Sapref refineries has strained local production capabilities.
SARS indicated that these coastal refineries ceased operations last year for various reasons, forcing them to rely heavily on imports to satisfy growing demand for aviation kerosene.
In April 2023, some refineries secured temporary SOS licences to store and distribute imported aviation kerosene to key airports such as OR Tambo International Airport (ORTIA) and others.
This move was deemed necessary to stave off an impending shortage of aviation kerosene as certain refineries underwent statutory maintenance. However, the current time-bound licences—issued under specific conditions—are set to expire later this month.
“The licences granted were for a specific period and under specific conditions at that time,” SARS commented.
“These licences were issued on the premise that the institutions would follow the formal process for licensing and comply with the Customs and Excise legislation.”
The revenue collector also emphasised that maintaining control over goods was essential in protecting state revenue.
The situation has raised apprehensions within the FIA, particularly as it has been over six months since the industry initiated its applications for permanent licensing of their facilities.
Despite expectations that the process would be completed relatively quickly, the FIA is still waiting for a resolution.
“The industry applied in early February for the licensing of their facilities, but this has not been concluded as yet,” Mzamo said.
“The concern is that without an extension on these temporary licences, we could face shortfalls in jet fuel supply that would disrupt air travel and commerce.”
As the clock ticks down toward the expiration of the temporary licences, the industry continues to implore SARS to take swift action to prevent potential disruptions in the aviation sector, highlighting the critical need for regulatory frameworks that reflect the industry’s evolving realities.
BUSINESS REPORT