DMRE rejects Eskom offer for diesel license

The Department of Natural Resources and Energy (DMRE) has rejected Eskom’s application for a diesel wholesale license.

Eskom applied for a license to import its own fuel in order to be able to buy diesel at the base fuel price rather than at the wholesale price. According to outgoing CEO André de Ruyter, this would bring the price down from around R23 a liter to around R16.

READ | Eskom can save billions with a diesel import license – but progress at DMRE is slow, according to De Ruyter

The license would have saved Eskom about R3 billion in fuel costs last year.

Eskom currently relies primarily on PetroSA for diesel to supply its open-cycle gas turbines, which often play a crucial role in protecting South Africa from less favorable periods of load shedding.

In a statement Thursday, the DMRE said that to import petroleum products directly, Eskom would need a license including import infrastructure and adequate storage facilities, which they currently do not have.

“The DMRE confirms that Eskom applied for the diesel wholesale license (sic) but that it was not granted because the application failed to meet certain requirements, details of which have been provided to Eskom as the applicant.”

Eskom can appeal the decision to Gwede Mantashe, Minister for Natural Resources and Energy. But the DMRE says Mantashe did not receive the appeal.

“Regarding claims that there is a potential saving of R6 per liter between the base fuel price and the wholesale price, the DMRE would like to point out that the R6 consists mainly of taxes, over which the DMRE has no control. If Eskom wants to be exempted from paying taxes that include the fuel levy and the traffic accident fund levy, Eskom should contact the relevant authorities,” the DMRE said.

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