The department of mineral resources & energy (DMRE) rejected Eskom’s application for a diesel wholesale licence, saying it did not meet “certain” requirements, the department said.
In a statement released on Thursday, the department said Eskom did not need a wholesale licence to buy directly from diesel importers.
“All oil companies operating in SA as well as other licensed importers can be approached for supply of diesel to Eskom at competitive prices,” the department said.
“To import petroleum products directly, Eskom would need a licence including import infrastructure and adequate storage facilities which they currently do not have.”
“With regards to claims that there is a potential saving of R6 per litre between the basic fuel price and the wholesale price, the DMRE would like to indicate that the R6 is mainly made up of taxes that the DMRE has no control over. However, if Eskom wants to be exempted from paying taxes which includes the fuel levy and Road Accident Fund levy, Eskom should approach the relevant authorities.”
While the department had refused Eskom’s application for a diesel wholesale licence, it said the utility could appeal the decision of the controller of petroleum products to mineral resources and energy minister Gwede Mantashe. No such appeal had been received by the minister.
The department was responding to a News24 article based on comments by outgoing Eskom group CEO Andre de Ruyter who said that Eskom could have saved about R3bn in fuel costs over the last year or so if it had had a wholesale license to import its own diesel which it uses to run its open-cycle gas turbines. The turbines are used to increase energy generation when the ageing coal fired power stations break down or are under maintenance and serve to alleviate load-shedding.
Eskom has spent about R15bn on diesel so far this year and having exhausted its budget has asked government for more funds. It reported a loss of R12.3bn in the last financial year to end-March. It relies on state owned PetroSA to supply diesel.
“If we were able to obtain this wholesale licence, then Eskom would be able to buy directly from importers or import it ourselves,” De Ruyter was quoted in the article as saying. “We would then be able to buy at the basic fuel price, and that would reduce the cost of buying diesel from about R23 to R24 per litre to somewhere in the order of R16.”
De Ruyter said the application had been sitting with the department for some time.
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