Sasol Form 20-F for the year ended 30 June 2021 - Book - Page 28
consumption in South Africa. Sasol,
together with industry bodies, are
engaging with the DMR with a view to
revise the implementation date because
we are of the view that the refining
industry in South Africa would require a
substantially longer period than two years
to meet these specifications. The
implementation of the Clean Fuels II
solution at Secunda is progressing well
and is on track to deliver on-specification
product by the end of 2025. The
promulgated Clean Fuels II Regulations
with the prescribed implementation date
of 1 September 2023 may have a material
adverse effect on our fuel manufacturing
operations at Secunda and Natref; and
holding of petroleum products and the status in this
regard is as follows:
•
The retail pump prices of petrol, the
maximum refinery gate price of LPG and
the single maximum national price of
illuminating paraffin are regulated. Prices
are adjusted monthly according to
published working rules and pricing
formulae;
•
The DMR is currently reviewing the BFP
mechanism. Revisions to the formula used
to calculate the BFP could significantly
impact revenue derived from liquid fuel
sales in South Africa;
•
Regulations to better align South African
liquid fuels specifications with those
prevailing in Europe (so-called Clean
Fuels II Regulations) were due to become
effective on 1 July 2017. As none of the
local refineries, including those of Sasol,
would have been able to comply with
these new specifications, the Minister
rescinded and amended the regulations in
June 2017. On 30 March 2021, new draft
regulations were published for a 60-day
public comment period for Clean Fuels II
Specifications. The draft regulations
indicated an implementation date of 5
years from the date of promulgation.
Compliance with these new fuel
specifications will require substantial
capital investments at both Natref and
Secunda operations. Sasol approved the
required capital to upgrade the Secunda
operations in time for the expected
regulation date in 2026. A Natref Clean
Fuels II solution was developed, however,
no investment decision has been made.
Discussions with the South African
government are ongoing. On 31 August
2021, the new Clean Fuels II Regulations,
replacing the previous regulations were
published. The technical specifications
are aligned with that previously
prescribed, but the promulgated
regulations now stipulate the required
implementation thereof by 1 September
2023. In terms of the Clean Fuels II
Regulations, fuels that do not comply with
the prescribed specifications may not be
sold or produced for domestic
•
On 30 March 2021, new mandatory
biofuel blending regulations were
published for a 60-day public comment
period and on 1 September 2021 the new
regulations were promulgated. These
regulations oblige licenced manufacturers
of fuel to blend between 2% and 10% of
bio-ethanol with petrol and a minimum of
5% bio-diesel with diesel in South Africa.
This required blending of bio-fuels at the
maximum level, may pose challenges to
the compliance with the Clean Fuels II
specifications. The new regulations are
being reviewed in conjunction with the
Clean Fuels II Regualtions to determine
the compliance requirements and the
required technical responses to enable
such compliance. These Regulations may
have an adverse effect on our fuel
manufacturing operations at Secunda and
Natref.
Regulation of pipeline gas activities in South Africa
The Gas Act 48 of 2001 (Gas Act)
The Gas Act provides NERSA with the
authority to issue licences for the construction and
operation of gas pipelines and the trading in gas.
NERSA also has the authority to approve gas
transmission tariffs and maximum gas prices that may
be charged by gas traders, where there is inadequate
competition as contemplated in the South African
Competition Act 89 of 1998. The Gas Act further gives
NERSA the authority to impose fines and other
punitive measures for failure to comply with the licence
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