The Department of Mineral and Petroleum Resources’ Draft Strategic Petroleum Stocks Policy 2026 carries material operational, financial and infrastructure implications that must be carefully assessed before finalisation, says industry body Fuels Industry Association of South Africa (FIASA).

The draft proposes a mixed reserve model that would require government to hold 60 days of cover while legally compelling private oil companies and wholesalers to store strategic commercial stock of a further 21 days at their own cost.

While FIASA chief executive Avhapfani Tshifularo welcomes the intent to strengthen security of supply, the draft policy proposes to shift a significant portion of stockholding responsibility to private industry, with direct consequences for working capital, infrastructure capacity and supply chain management.

“Strategic stocks are an important component of resilience, but they must be supported by practical implementation arrangements and efficient supply chain systems.”

From an operational perspective, key considerations include storage availability and suitability, logistics planning, stock rotation and product quality management, Tshifularo adds.

Holding additional inventories for 21 days means that companies will need to manage longer dwell times, ensure fuel integrity, and align rotation with normal commercial demand cycles to avoid degradation or disruptions to existing supply arrangements.

“The obligation translates into higher working capital requirements to fund larger inventory volumes. For refiners, wholesalers and distributors, this adds cost pressure at a time when margins are already under scrutiny. There is also the question of who bears the cost of financing, insurance and potential product losses over the holding period.”

From an infrastructure perspective, FIASA says the availability, location, suitability and accessibility of storage will be central to implementation. This extends beyond tank capacity to include port access, pipeline and road transport logistics, product handling capability and systems to support stock rotation and quality.

A detailed assessment of existing assets against the final policy design will be needed to determine what new investment is required. The draft policy currently specifies a stock mix of 70% crude oil and 30% refined product, with mention of storage at Saldanha and Milnerton, in the Western Cape.

Governance, Effectiveness and Public–Private Collaboration

From an industry viewpoint, the effectiveness of the proposed 60-day government plus 21-day industry model in shielding South Africa from global supply shocks, particularly as the country is reliant for about 70% of its refined petroleum products on the Middle East, will depend on several factors, states Tshifularo.

These include clearly defined responsibilities, how reserve stocks are financed and governed, whether adequate infrastructure and logistics capacity exists, and how government and industry coordinate during a disruption.

Compliance is another major focus. While FIASA supports appropriate governance and oversight, it warns that requirements must be practical, proportionate and aligned with the realities of the liquid fuels supply chain.

“To be workable, reporting templates, verification processes and enforcement provisions should avoid unnecessary administrative duplication or disruption to business. Government support in the form of regulatory clarity, realistic timelines and ongoing engagement with refiners, wholesalers and retailers, will be important.”

The draft policy also raises broader industry questions.

For example, Mineral and Petroleum Resources Minister Gwede Mantashe cites South Africa’s over-reliance on imported refined products in the draft; FIASA says the stockholding framework should, therefore, align with efforts to expand local refining capacity and develop a sustainable petroleum value chain.

“Consideration must also be given to the changing structure of refining and import arrangements, so that the final policy remains responsive to market conditions,” Tshifularo says.

On rollout, Tshifularo emphasises that public–private collaboration will be critical. Government sets the policy and regulatory framework, while industry provides operational experience, infrastructure knowledge and supply chain expertise. That partnership, he remarks, is key to ensuring arrangements are transparent, practical and capable of supporting continuity of supply during periods of market stress.

FIASA has submitted detailed comments through the formal consultation process and says it remains available to engage with government to assist in creating a balanced framework that strengthens security of South Africa’s petroleum supply without creating avoidable operational risks or driving up costs.