Should South Africa be looking at a fuel agreement with Russia in order to get cheaper oil? Here are some important facts you should know.
THE CONSTANT fuel hikes have made many South Africans groan with agony as they ask why we are still paying more and more for petrol and diesel.
The Department of Energy and Mineral Resources (DMRE) announced on Tuesday that following September’s brutal fuel price hikes, petrol and diesel are set for more steep increases this month.
Petrol will increase by between R1.08 (for 93 Unleaded) and R1.14 (for 95 Unleaded) from Wednesday, October 4, while diesel prices will go up by between R1.93 (low-sulphur 50 ppm) and R1.96 (500 ppm).
Following these increases, a litre of 95 Unleaded will now set you back R24.96 at the coast and R25.68 in the inland regions, while 93 Unleaded will rise to R25.22.
The even steeper diesel increases will see the wholesale price of 50 ppm rise to R24.51 at the coast and R25.22 inland, while 500 ppm will cost R24.29 and R25.01, respectively.
WHERE IS THE RUSSIAN OIL?
Earlier this year, there were a number of reports that South Africa’s relationship with Russia and the fact that we are BRICS partners would lead to possible fuel trade agreements.
It should be noted that South Africa abstained three times in 2022 from voting on resolutions condemning Russia’s invasion of Ukraine at the United Nations.
South Africa has been criticised mercilessly for its inaction by the international community and it would be fair to ask why we are not benefiting from our strategic partnership.
WE DON’T HAVE THE REFINING CAPACITY
In June 2022, Minister Gwede Mantashe called for South Africa to purchase Russian crude oil.
These calls were criticised by DA member Kevin Mileham, who said at the time that “Mantashe’s comments and calls for South Africa to buy oil from Russia are misguided”.
“South Africa’s refining capacity is at an all-time low at the moment, with the majority of our refineries shut down, so we have no way of refining oil purchased from Russia.”
According to Mileham, it is far cheaper to buy and refine fuel from countries in the Middle East, Singapore and Europe, according to Voanews.
OUR OTHER PARTNERS
In June 2023, Bloomberg reported that South Africa could stand to lose $32.4 billion (R625 billion) in export revenue if any of our main trading partners choose to retaliate or penalise us for our stance on Russia and its invasion of Ukraine.
It should also be noted that the European Union (EU) and the United States account for 30.4% of total exports by South Africa, whereas our exports to Russia only amounts to 0.23%.
Ndivhuho Netshitenzhe, an economist at Stanlib Asset Management, said at the time that should geopolitical tensions increase between the West and South Africa, we could lose more than R600 billion in export revenue.
It should also be noted that Janet Yellen warned South Africa in January 2023 that the US would act decisively if South Africa violated Russian sanctions.
ENERGY PROJECTS
Despite these warnings, Russia and South Africa were discussing joint projects in the energy sector, including the construction of a gas power plant and supplies of Russian liquefied natural gas (LNG) for new generating capacities, the Russian Energy Ministry said in a statement in August.
Bilateral co-operation was discussed by Russian Deputy Energy Minister Sergey Mochalnikov and South African Ambassador to Russia Mzuvukile Jeff Maqetuka shortly before a BRICS ministerial meeting on energy.
“Our countries are interested in developing mutually-beneficial co-operation in the energy sector. We are working with our South African partners on the possibility of building a gas power plant. We are already discussing the supply of equipment and the possibility of organising the supply of Russian LNG for effective operation of new generating capacities,” Mochalnikov said, as quoted by the ministry.
