Implementation of the proposed Clean Fuels II regulation in South Africa
Date
2016
Authors
Mhlongo, Simphiwe C.
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Abstract
ABSTRACT
The South African government gazetted petroleum products specification
regulation, better known as Clean Fuels II (CFII) in 2012. This regulation seeks to
improve air quality via improved quality of petroleum products that are used in
vehicles.
To comply with the regulation requirements, oil companies will have to
upgrade their existing refineries, which will require capital investment. The industry
has indicated that they cannot meet the requirements of the regulation without
government’s assistance via either subsidies or cost recovery mechanisms. They
have further indicated that if the government goes ahead with this regulation, as is,
they might have to shut down some of their refineries, thus putting the country’s
security of petroleum product supply a risk. The petroleum industry is responsible
for the production, importing and selling of petroleum products that are needed for
almost all productive activities of our economy.
The purpose of this study was to investigate what is the best way of
implementing the proposed regulation to include cost recovery mechanisms that will
ensure the preservation of the SA market size.
This was an interpretative case study on the petroleum industry that looked at
the best practices from other countries that have been through this journey and also
sought views from the industries’ subject matter expects. Data were collected via
semi-structured interview guides. The data were later analysed and interpreted.
The research found that regulating was the best way of ensuring that the
quality of petroleum products produced by refineries improves, thus helping to
improve our air quality. The research also concluded that subsidies through price
increases, such as levies, are the most effective way of ensuring a successful
implementation of the regulation.
Description
MBA Thesis
Keywords
Petroleum law and legislation, Petroleum industry and trade, Clean energy industries -- South Africa.