Refinery closures added R76bn to South Africa’s oil-import bill, Reserve Bank says

South Africa could have spent R76 billion less on oil imports if more of its domestic refinery capacity had remained open, according to a South African Reserve Bank economic note.

The central bank estimated that petroleum-import spending would have been 6.1% lower on average in the four years to 2024 if refined-product imports had been held to 25% of supply.

Moneyweb, citing Bloomberg’s report on the note, said refinery closures had reduced petroleum-related manufacturing output by about 20% since 2019. The Reserve Bank estimated that 5 400 direct and indirect jobs had been displaced.

More than half of fuel demand met by imports

South Africa’s refining capacity has halved over the past decade. Imported petrol, diesel and other refined products now meet more than half of domestic fuel demand, increasing the country’s exposure to international prices, shipping disruptions and changes in the rand exchange rate.

Only two crude-oil refineries are operating: Sasol’s Natref plant and Astron Energy’s Cape Town refinery. Their combined processing capacity is about 208 000 barrels a day.

The Central Energy Fund said last week that it intends to rebuild the Sapref refinery south of Durban. The plant was idled after flood damage in 2022. The fund is targeting capacity of 400 000 barrels a day, although the final timetable and cost have not been announced.

The Reserve Bank’s findings put a price on the shift from local refining to imported finished fuel. That change has become more visible this year as international oil prices and the cost of moving fuel through global supply chains have pushed South African petrol and diesel prices higher.

The economic note does not suggest that all imported fuel can be replaced immediately. It says, however, that the loss of refining capacity has made the economy more vulnerable to shocks outside South Africa.