Service stations in the Southern Cape and Gqeberha have taken a financial hit after being instructed by franchisers not to sell unleaded 95 petrol due to “quality concerns” over the product supplied from a fuel terminal in Mossel Bay.
Shell retailers were told earlier this week to stop selling fuel known as Mogas 95 after complaints by motorists about spills staining the paint on their vehicles. Motorcyclists and owners of motorboats and light aircraft have also complained.
On average, on the basis of a dealer margin of R2.85/l, each of the service stations that stopped sales lost nearly R180,000 a day.
Petroleum companies were forced to source fuel from Cape Town and East London at significant cost to supply retailers from Mossel Bay to Knysna and Gqeberha.
Shell, Engen and others said it appeared to be an industrywide problem.
We were told to stop selling but then what? A lot of retailers have taken big loans to run their businesses and losing money puts them in serious trouble
— Petrol station owner
Shell told petrol stations it supplies this week: “We regret to advise you of a potential product quality concern related to Mogas 95 supplied from the Mossel Bay terminal. As a precautionary measure and to allow us the opportunity to conduct further analysis we are suspending all sales of the Mogas 95 grade in the [affected areas].
“You are hereby requested to immediately lock out all VP95 nozzles at your Shell retail service station. We understand the impact of this decision and assure you that the matter is receiving our urgent attention. We remain committed to ensure the uninterrupted supply of quality fuels to all our customers and will share further details as more information becomes available.”
But Shell later did a U-turn and told its retailers on Thursday they could continue selling the unleaded 95 they had in their storage tanks.
Some fuel retailers, speaking on condition of anonymity, said there had been complaints about the petrol since last October. These were relayed to franchisers.
“We were told to stop selling but then what? A lot of retailers have taken big loans to run their businesses and losing money puts them in serious trouble… People are still sitting with the same product they [initially] said should not be sold. What happens with being reimbursed, because the faulty product is not the retailer’s problem,” said one.
Another retailer said his supplier was not willing to compensate its clients.
“They are refusing to take responsibility and pay back retailers,” this retailer said. “And yet this was a faulty product supplied by them. When you run a fuel station and can’t sell fuel, that hits you in the pocket. It also threatens a lot of jobs. We have been alerting them to this problem since last year, and they did tests, but we still get the same fuel.”
The department of minerals & energy (DMRE) said earlier this year it had found scores of service stations selling contaminated diesel.
Petroleum companies told the Sunday Times the South African Petroleum Industry Association (Sapia) would respond on their behalf. Sapia executive director Avhapfani Tshifularo said the issue was being taken seriously and the fuel was being sampled and tested.
“Sapia was made aware of the issue recently, by one of its members, who indicated that vehicles and containers of petrol (which include motorbike tanks and motorboat tanks) were being stained by the petrol. The issue has now been extended to other marketers of ULP [unleaded petrol] in the region and also reported by some light aircraft enthusiasts,” said Tshifularo.
He did not foresee a fuel shortage in affected regions as oil companies had “instituted business continuity interventions”.
These interventions included rerouting supply from the Western and Eastern Cape.
The Petroleum Oil & Gas Corp of South Africa (PetroSA), one of the suppliers of unleaded 95 petrol, is also investigating.
“PetroSA has been engaging with the industry through Sapia to address the complaints received regarding the staining of vehicles allegedly by the ULP 95,” said spokesperson Nonny Mashika-Dennison.
“This batch of product, like many batches delivered before, was tested by independent parties, as has been the procedure in the past and was confirmed, again, to be compliant to ... industry standards…
“The declining refining capacity in South Africa has a knock-on effect on other sectors of the economy, therefore, PetroSA has been tasked with the mandate of ensuring security of energy supply in the country.
“PetroSA remains committed to ensuring security of supply of quality products and has enough stock to supply demand,” said Mashika-Dennison, dismissing any fears of a looming crisis.
DMRE spokesperson Makhosonke Buthelezi said the department was aware of the problem and PetroSA was addressing it.
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