South Africa’s fuel industry has undergone a dramatic transformation in recent years, with the country currently importing over 60% of its required petroleum products. This is a significant jump from just 22% four years ago a shift that brings added risks to our local economy.
This shift comes as a result of a shrinking domestic refining capacity, and so instead of importing crude oil to refine locally, South Africa is importing the refined product. Sarah Wright, Senior Underwriter at Lombard Guarantee, explains that this evolution calls for more flexible financial instruments to maintain a steady flow of fuel (and cash).
“As we transition to becoming a net importer of refined fuel, fuel wholesalers and consumers in our economy are needing to look further afield for supply and therefore diversify their suppliers, often purchasing from more than one source.”
According to Wright, the challenges go beyond supply risks. “The move to importing refined fuel has added complexity for suppliers and buyers, who have been forced to navigate financial exposure across international transactions,” she says.
