A week after it concluded public hearings to secure a licence from the National Energy Regulator of South Africa (Nersa) to develop a new fuel storage facility in the Western Cape. Burgan Cape Terminals plans to lodge a Competition Commission complaint against Chevron for “anticompetitive” behaviour,
Burgan was currently awaiting Nersa’s decision on whether or not a licence should be awarded for the development of an independently owned and operated liquid fuels storage and distribution facility at the Eastern Mole of the Port of Cape Town.
Oil major Chevron opposed the licence application as it believed the Transnet National Ports Authority-awarded 20-year tender to build fuel storage and distribution facilities would negatively impact its own Milnerton-based Calref refinery.
Chevron currently operated a 110 000 bl/d refinery producing gasoline, diesel, jet fuel, liquefied petroleum gas, fuel oil, asphalt and other products, which it averred would be threatened by the new facility.
Burgan accused Chevron of allegedly engaging in “exclusionary conduct” and breaching Section 8 of the Competition Act in attempts to block the licence application based on an argument that a flood of imports would threaten its operations.
Chevron was estimated to supply more than 90% of fuel to the Western Cape region.
“Chevron’s argument that the refinery will have to close is a red herring to hide its exclusionary conduct and block competition. Existing South African import regulations ensure local production is prioritised over imports, hence protecting the refinery,” said Burgan CEO Muziwandile Mseleku.
The company said that “at worst” Chevron profits would be hit by the introduction of a new facility, which would allow better bargaining power owing to the option of an alternative supplier and the entrance of new players and wholesalers.
However, oil companies in the Western Cape would continue to support Calref’s supplies in preference to imports and coastal supplies, even if the Burgan Terminal was installed, owing to legislative protection.
“Chevron’s objection undermines the urgent need to ensure that there is enough fuel in the Western Cape to power Eskom, other critical industries like farming, trucking, commercial fishing and aviation, as well as to keep petrol stations from running dry, especially those in the more remote and rural areas,” Mseleku concluded.