DMRE rejects Eskom’s bid for diesel licence

The Department of Mineral Resources and Energy (DMRE) has rejected Eskom’s application for a wholesale diesel licence.

Eskom applied for the license to import its own fuel so that it could buy diesel at the basic fuel price, instead of the wholesale price. This would reduce the price from about R23 per liter to about R16, according to outgoing CEO André de Ruyter.

READ | Eskom can save billions with diesel import licence, but De Ruyter says progress with DMRE slow

The license would have saved Eskom about R3 billion in fuel costs over the past year.

Eskom currently relies primarily on PetroSA for diesel to supply its open-cycle gas turbines, which often play a critical role in protecting South Africa from more adverse stages of load shedding.

In a statement on Thursday, the DMRE said that to import petroleum products directly, Eskom would need a license that would include adequate import infrastructure and storage facilities which they currently do not have.

“The DMRE confirms that Eskom has applied for the diesel wholesale license (sic) but it was not granted because the application did not meet certain requirements, the details of which have been shared with Eskom as sole bidder”.

Eskom can appeal the decision to Gwede Mantashe, Minister of Mineral Resources and Energy. But the DMRE says Mantashes has not received the appeal.

“In relation to claims that there is a potential saving of R6 per liter between the basic fuel price and the wholesale price, the DMRE wishes to point out that the R6 is mainly made up of taxes over which the DMRE has no control “However, if Eskom wishes to be exempt from paying taxes that include the fuel levy and road accident fund levy, Eskom should approach the relevant authorities,” the DMRE said.

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