Spillover effects

25th March 2022

By: Terence Creamer

Creamer Media Editor


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There is significant concern, and rightfully so, about the outlook for fuel prices and security of supply following Russia’s brutal invasion of Ukraine in late February.

No country is immune from the fallout and South Africa, which is a crude and fuel importer, is expected to feel the effects initially in higher prices, largely because imported fuel inflation will spill over into domestic inflation. Likewise, food inflation will probably also rise, owing to the fact that Russia and Ukraine collectively account for 30% of global wheat exports.

There are also growing security-of-supply concerns, particularly given indications of an emerging global shortage of diesel, stocks of which were already low as a result of Covid lockdowns.

In South Africa, diesel is important not only for mobility, but also for farming, mining and electricity production. Had it not been for diesel, the most recent bout of load-shedding at Stage 4 would have been intensified by up to three stages, as the diesel-fuelled open-cycle gas turbines were operated well outside of peak times to reduce the intensity of the cuts.

However, there is another threat to security of supply that is not receiving sufficient attention: the diesel spillages that frequently occur when thieves steal or attempt to steal fuel from Transnet’s Multi Product Pipeline between Durban and Heidelberg.

There have been several spillages in recent weeks, including a serious one near Verkykerskop, about 50 km from Harrismith in the Free State. A video of the incident was widely shared across media and social media platforms. It showed diesel gushing from the pipeline on to land close to the Meul river, a tributary of the Wilge river, which is itself a tributary to the Vaal river.

The incident forms part of an ongoing pattern of theft, with Transnet confirming that 3.5-million litres of diesel have been lost during 2021/22. While down from the 8.5-million litres stolen in 2020/21 and the nearly 12-million litres stolen or spilled in 2019/20, theft incidents are frequent and hard to police, given that the 3 114-km network traverses five provinces.

As worrying as the theft is the risk that, at some point, the incidents could seriously disrupt the flow of fuel inland, or alternatively that a spill will be so large and pose such an environmental hazard that the authorities will be forced to shut the pipeline for an extended period.

There are concerning reports, too, that spill sites are not being rehabilitated to prescribed standards, even though Transnet, the Department of Forestry, Fisheries and the Environment and the National Energy Regulator of South Africa insist that there is “no noncompliance” currently.

If Transnet Pipelines is indeed found to be wanting in its rehabilitation efforts, the authorities may be forced into a position whereby operations are halted while remediation efforts are undertaken.

Should any of these scenarios materialise, the social and economic effects would be devastating. Fuel would have to be transported by road or rail tankers and stockouts would be difficult, if not impossible, to prevent.

Edited by Terence Creamer
Creamer Media Editor



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