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Diesel shortage rocking SA may get worse come June

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SA has been hit by diesel shortages and currently implementing diesel rationing, the South African Petroleum Industry Association (Sapia) announced on Tuesday.

Sapia expects the shortage to continue until mid-June as more industries will open at the phasing in of alert level 3.

The association said that “at this stage” the impact of the shortage is on commercial and industry, sparing consumers. The organisation said the interior and KwaZulu-Natal would be most affected.

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Dramatic increase in demand

The demand for diesel is close to what it was prior to the lockdown, said Sapia, suggesting surprising resilience in the economy. “The opening of the economy has resulted in a more rapid recovery than expected,” said Sapia in a statement.

“There has been a dramatic increase in demand for diesel.” The organisation said the country has begun stock rationing in order “manage demand and to preserve stock.”

This raises the possibility that diesel will not be readily available and probably will be available in limited quantities.

“Since the easing of lockdown restrictions and the transition from alert level 5 to alert level 4, the opening of the economy has resulted in a more rapid recovery than expected. There has been a dramatic increase in demand for diesel,” reads a Sapia statement.

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The oil companies were caught off guard by the change from Phase 5 to Phase 4 with restrictions, which suddenly boosted diesel sales while sales literally stopped the previous two months.

Alert level 3 which is expected to start from June 1, will further increase demand as more industries will restart operations.

Sapia could not say when the problem will be rectified.

Read also: June fuel prices increase to be bigger than expected

Refineries shutdown

“Unplanned shutdowns were a contributing factor which led to this and the shortage.”

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More than half of SA’s refining capacity was shut amid the lockdown, which started on March 27, and restricted activity to essential services, curbing demand for fuel.

Those rules were eased and some industries were allowed to restart operations in May.

Stockpiles of diesel are running low, the department of mineral resources & energy and energy said, according to Bloomberg.

Both refineries in Durban are currently starting up and on-spec production is expected by month-end. Diesel supply will then normalise, says Sapia.

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