Imagine a minibus taxi driver in Johannesburg pulling up to a fuel pump and noticing the price tag has jumped again. The extra rand per litre is not just a market quirk, it is the direct result of a decade-long erosion of the country’s ability to turn crude oil into petrol, diesel and other liquids.
The South African Reserve Bank (SARB) released a report that confirms the nation’s refining capacity has been cut from more than 720,000 barrels per day (bpd) to roughly 250,000 bpd. In plain terms, the country now produces less than a third of the fuel it used to, meaning more than half of the liquid fuels consumed are bought from overseas.
The report points to two main reasons. First, the refineries that remain, such as SAPREF, Enref and PetroSA’s Mossel Bay plant, are older and smaller than modern global facilities, making them expensive to run. Second, prolonged uncertainty around the Clean Fuels II (CF2) programme kept owners from committing billions of rand to needed upgrades. As the SARB put it, the lack of clear policy left investors hesitant.
Importing refined fuel is not a cheap substitute for domestic processing. On average, imported petrol and diesel cost about 12% more than the crude oil they are made from. The SARB estimates that between 2021 and 2024 the country’s oil import bill could have been R76 billion lower if a stricter cap on refined-product imports had been in place. Higher import costs feed directly into the trade balance, putting pressure on the rand and on the broader economy.
The knock-on effects extend beyond the pump. The closures have trimmed petroleum-related manufacturing output by roughly 20% and displaced an estimated 5 400 jobs, both directly in refineries and indirectly in supporting industries. By-products such as bitumen, once a South African export used for road building, are now fully imported, adding cost to construction projects. Chemicals derived from refinery streams, essential for fertilisers and plastics, also now have to be sourced abroad.
What this means for small and medium enterprises
Transport operators, from long-haul trucking firms to city-level taxi services, feel the price rise immediately in fuel expenses, squeezing profit margins that are already tight because of load-shedding and tolls. Construction companies see higher bitumen prices, which can delay road projects or force contractors to renegotiate bids. Retailers that sell fuel or depend on petroleum-based packaging face a double hit: higher wholesale costs and reduced consumer spending power.
SMEs can respond in a few practical ways. Fuel-hedging contracts, where available, lock in prices for a set period and protect against sudden spikes. Investing in more fuel-efficient vehicles or alternative energy sources can reduce the volume of fuel needed. Keeping a close eye on policy developments around Clean Fuels II may also reveal opportunities for subsidies or tax relief if the government finally clarifies the standards.
The SARB’s findings underline that the fuel-import dilemma is unlikely to disappear soon. Without decisive regulatory action and investment in modernising the remaining refineries, the country will remain dependent on foreign fuel, with the associated cost and supply-risk implications. For the owner of a small logistics firm or a local builder, the message is clear: fuel costs are now a strategic factor that must be managed as carefully as any other business expense.
