The new entrant into the South African fuel storage industry said Chevron’s objection to fuel storage terminal was intended to block competition.
The company added that Chevron’s threat to close the refinery is red herring as the refinery’s profitability is protected by import regulation.
“The company believes that Chevron, the dominant player in the Western Cape fuel market, is engaged in exclusionary conduct and consequently is in breach of section 8 of the Competition Act,” said Burgan Cape Terminals in a statement.
Mzwandile Mseleku, chief executive of Burgan added that Chevron’s argument that the refinery will have to close, is a deception 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 Mseleku.
“Importers of fuel to South Africa cannot do so without a permit from the Department of Energy. Permit guidelines indicate that local manufacturing and security of supply should be taken into consideration during the issuing process.”
Mseleku added that petroleum products may only be imported if the refinery is short of product or cannot produce a particular type of fuel and noted that otherwise, all fuel distributors in the Western Cape are reliant on Chevron supply.
The company believes that additional fuel storage facility will ensure security of fuel supply in the Western Cape and is in the country’s interest.
Chevron is estimated to supply more than 90 per cent of fuel to the region.
Chevron is opposing Burgan’s plan to develop a fuel storage and distribution facility in the Eastern Mole of the Port of Cape Town, alleging that it will allow for the rampant importation of fuel on a scale which will result in the closure of its Milnerton-based Chevref refinery.
It has objected to Burgan’s EIA and the granting of a construction and operations licence by NERSA.
(WATCH VIDEO: Chevron opposes the Burgan Cape Terminals)
Burgan’s storage facility will be leased to fuel marketers in the Western Cape Region and will add much-needed fuel storage and distribution capacity into a market that continues to suffer from inadequate security of supply from the refinery.
The National Port Authority awarded Burgan the tender for the development to address the ongoing problems with security of fuel supply in the area.
The facility will also provide access to storage facilities for independent wholesale license holders, thus lowering the barriers to entry and fostering healthy competition in the Western Cape’s fuel storage and distribution market.