SA oil sector misses minority supply chain target

6 July 2012

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7 July 2012 | Adam Leach

Oil companies in South Africa have failed to fully comply with the principles of a charter to promote and support black and minority-owned businesses in the liquid fuels sector.

An audit, commissioned by the Department of Energy and carried out by black female-owned firm Moloto Solutions, found the industry has failed to meet its target. The Liquid Fuels Charter of 2000 called for 25 per cent involvement of minority businesses in the supply chain over 10 years. The audit, which reviewed data covering a 10-year period, up to October 31 2010, found just 48 per cent of firms had achieved the required level.

Energy minister Dipuo Peters highlighted preferential procurement as an area where progress was in fact in reverse. “The figures in the report show that the status in this instance is worse than it was in 2006 with respect to both the Liquid Fuels Charter and Black Economic Empowerment frameworks,” she said.

The audit found that over the 10 years it reviewed, just two out of six oil companies had purchased oil from previously disadvantaged entrepreneurs.

Progress has been made in the area of “black shareholding” which is at 18.91 per cent, but minister Peters suggested this could be due to companies seeing it as the quickest area to make progress, with the broader benefits that come from the value chain being lost as a result. She said: “The lack of technical skills transfer has proven to be the biggest lost opportunity during the period under review.”

Having already presented the findings to the cabinet, Peters said an “economic cluster” of departments would work together on developing the policy of the charter. She suggested that it might be broadened out to encompass the whole energy sector.

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