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DEPT OF ENERGY



All petroleum products consumed in the country are imported from the Durban
refineries in South Africa by the oil companies. The oil companies distribute
the products to filling stations and to commercial users.

For Swaziland the situation is that all petroleum products are presently
imported from South Africa where there is a regulation of product prices. The
Ministry plays a regulatory role in the petroleum downstream activities, in
particular the pricing of all controlled petroleum products i.e. petrol, diesel
and illuminating paraffin. The government's objective to keep petroleum prices
affordable to the public is undermined by the volatility in international oil
prices and the Lilangeni/Dollar exchange rate which the government has no
control over.

The Ministry also regulates the number of service stations in the country
through the Petrol Rationalisation Committee, which achieves its role through
the Service Station Rationali

sation Plan (RATPLAN). At the moment the Ministry is working on the Petroleum
Bill and the RATPLAN is being reviewed to have it incorporated into the
Petroleum Bill so that it is enforceable in law.



The Ministry is investigating ways of making sure that fuel prices remain
affordable for both industrial and domestic use. One strategy is the amendment
of the Fuel Oil Levy Act of 1979. This will look at how the Strategic Oil
Reserve Fund can be best managed so that in a situation of high international
crude oil prices, the fund could be used to reduce the accumulated negative
slate balance avoiding high fuel price increases. Additionally, the Ministry
will investigate the option of importing refined products using other
alternative routes for security of supply reasons.

In the short term the department will also concentrate on the following:

 * Consolidating all relevant petroleum legislation into a Petroleum Act,
 * Developing mechanisms for ensuring diversification of the sources of
   petroleum products imported into the country,
 * Establishing national strategic depots for petroleum products sufficient to
   sustain the economy for a maximum of 90 days,
 * Developing models for fair calculation of oil industry and dealer margins.
 * Investigating means of achieving least cost retail prices of LPG and
   paraffin,
 * Developing and implementing quality control measures that will ensure that
   marketers of oil products adhere to agreed product specifications-including
   environmental considerations-and that these conform to regional and/or
   international standards,
 * Developing legislation to ensure that all stakeholders in the oil and
   transport industry manage their waste oil in an environmentally friendly
   manner; and
 * Introducing safety standards for LPG and paraffin equipment.


Petroleum Act

The Ministry is in the process of updating, amending and consolidating existing
pieces of legislation on petroleum, in line with the National Energy Policy to
produce an all-embracing and comprehensive petroleum act: The Petroleum Act will
address the following issues:



 * Regulation and deregulation of the oil industry
 * Ensuring adequate product availability in rural areas
 * Ensuring stable and reliable product availability for the country’s economy
 * Achieving regional competitiveness and fair pricing of petroleum fuels
 * Encouraging meaningful and sustainable participation of locals in the
   industry
 * Imposition of levies and taxes on petroleum products;
 * Administration of the Strategic Oil Reserve Fund; and
 * Provision of information concerning motor vehicles.

Consultations with key stakeholders in the fuel sector locally, and in the SACU
region have taken place and a draft framework of the Legislation is now in
place. It is expected that by mid September 2009, a draft Petroleum Bill will be
submitted to Parliament.
Fuel Storage

The Energy policy of the country requires that all Oil Companies establish
minimum stocks. Each company is required to store a minimum quantity of
stocks.Fuel storage for petrol and diesel continues to be a major concern to the
Government. Petroleum fuel storage capacity in Swaziland currently stands at
less than 5 days. It is unacceptable for any country to have such a low storage
capacity especially if it is land-locked and most of the fuel travels by
trucks.The Ministry has completed a feasibility study for the strategic stocks
and a site investigation in 2006, and 2008 respectively. The study amongst other
findings identified Phuzumoya is a suitable site for both under ground and above
ground alternatives. The Ministry is now working on the possible options of
financing the construction of the depot.

The Ministry is looking into partnering with a private investor in order to
retain control over the supply of petroleum products. Further, the Ministry is
working on establishing a National Oil Company that will also participate in the
procurement and distribution of fuel, hence protecting the interests of the
public and further enhancing security of supply.

Potential Sources of Financing

 * For the country, investing in a strategic storage facility will be a major
   undertaking requiring exploring alternative means of financing
 * The two major components, capital expenditure and the stocks of products,
   should probably be considered separately when it comes to financing
 * Operation of the storage facilities as such may also be a matter to separate
   consideration
 * The question of ownership of the facilities and possible private
   participation in these will be a basic premise for the type and sources of
   financing
 * BOT (Build Operate Transfer) / BOOT (Build-Operate-Own-Transfer) arrangement
   is conceivable
 * But although the Government wishes to move towards private participation in
   the different sectors of the economy, it also wishes to retain control over
   the supply of petroleum products, which has implications for the question of
   ownership.


Petroleum Pipeline and refinery


Studies to construct a pipeline in parallel with the natural gas pipeline or
along the railway line from Maputo to Phuzumoya need to be conducted. The
Petroleum pipeline will be designed to bring all the imported petrol, diesel and
illuminating paraffin. Investigation on the Establishment of a refinery would
also be conducted.

Fuel Marking and Quality Assurance Programme

Fuel Marking project was initiated on October 2004 with an aim of monitoring the
quality of fuel in the country and the reduction in revenue due to the constant
decline in the fuel volumes.
The key objectives of the project are as follows:



 * Assessment of whether there are illegal activities in the countries fuel
   supply chain; if so, where is it occurring.
 * Introduce relevant control measures and data reporting systems once based on
   the results of objective 1.
 * Deter malpractice and thus increase legal fuel sales.


The project presents the following benefits:

 * Control and understanding of fuel movements in the country.
 * Ensure fuel quality and standards adherence.
 * Prompt and precise volume import data which might be useful for customs duty
   and tax calculations.
 * Discourage illegal activities in the fuel chain such as blending the
   conventional fuels with low tax paraffin and fuel dumping.


It has been observed that since the inception of the project, there has been
better monitoring and understanding of the fuel industry. The project has
identified other areas in the petroleum sector where there is malpractice and
that need tighter controls.

The Ministry would like to convert this project into a comprehensive programme
that will test the quality of the fuel that is imported as well as monitor fuel
imports and distribution through trucks and trains to ensure that all fuel
destined for Swaziland reaches its final destination and no fuel is stolen and
sold illegally around the country. This will assist Government and other
stakeholders in realising the revenue that is due to them.

A new fuels laboratory has been established by the Ministry to assist in this
exercise. Testing equipment has been purchased and the parameters that will be
tested include water content, sulphur levels, lead content, octane levels etc,
to ensure that the fuel imported is as per specification. These specifications
will soon be adopted and legalised in Swaziland through the Swaziland Standards
Authority. This exercise, along with the development of a Petroleum Act, will
assist Government in enforcing compliance in the petroleum industry.

HANDLING OF LPG AND PARAFFIN

HANDLING PETROL AND DIESEL

Press Release- Fuel Price Decrease. January, 2019


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