Proposed fuel legislation to cause major issues for farmers

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DUDU RAMELA: In October 2024 the Department of Mineral Resources and Energy published the draft Petroleum Products Bill for public comment. The purpose of the bill, it said at the time, was to ensure the security of petroleum products and to introduce modern and environmentally friendly components that will improve South Africa’s energy mix.

According to the bill, all consumers who store petroleum products for their own use – such as farmers – must have an end-user certificate. One of the provisions of the bill is that end users will have to provide financial guarantees in the form of insurance, a bank guarantee or cash.

The proposed new legislation requires every fuel storage point on a farm to have a certificate and also seeks to limit fuel sellers such as agricultural businesses.

Now, the Agricultural Business Chamber of South Africa or Agbiz has expressed concern over the bill. Annelize Crosby is Agbiz’s head of legal intelligence. Annelize joins me this evening to give us some context – what it is that farmers are doing and what the bill is seeking to introduce. Thank you very much for your time.

ANNELIZE CROSBY: You’re very welcome. I think one acknowledges that there is probably a need for renewables. There’s regulation in existence currently, but that dates from 1977.

I think one also needs to acknowledge that regulation in the petroleum industry is necessary, but the extent to which this bill goes in its regulation we think is going to cause problems in practice – not just for farmers, producers on the farm, but also for the whole of the agricultural value chain.

So if we can start with the end-consumer facility certificates, this is completely new.

In the current legislation there is already a controller, there’s already a requirement for licences – but this certificate is a new thing.

So what is required is that anybody who stores or uses petroleum – and the definition of petroleum is very broad, it’s petrol, diesel, paraffin, all sorts of biodiesel, everything included – for their own use in bulk will have to apply for such a certificate, an in-facility certificate.

Our estimation is there are probably well over a hundred thousand of these facilities, and it seems that each and every such in-facility will probably require a certificate.

So just the process of applying, and for these controllers to go through all the applications and then allocate the certificates, we foresee is going to be very problematic.

Also, I don’t think many farmers are aware of this requirement at this point in time. It has never been required before, so you’re going to need a huge communication campaign, information campaign, just to get everybody to know about this requirement.

And then of course, there are very high penalties that will apply.

If an inspector comes to your farm and you are required to have an end-user certificate and you can’t produce that end-user certificate, they’re talking of fines in the region of R50 000 per day for such a contravention of the legislation.

DUDU RAMELA: Please would you allow this very simple question. Why do farmers store fuel on their property?

ANNELIZE CROSBY: Okay. Lots of farmers have tractors, they have harvesters, all sorts of machinery, generators that use a lot of fuel. So they have to buy fuel in bulk in order to run all those farming machines.

DUDU RAMELA: Ah, got you. Thank you very much. So when you speak of some of these headaches for farmers, and what farmers are unaware of, this bill is also looking to give inspectors broad powers. What are some of those broad powers that will then be given to these inspectors?

ANNELIZE CROSBY: It seems that the inspectors will be able to come onto facilities without prior notice and require all sorts of documentation and so on. That can of course disrupt a business such as a retail fuel facility.

And then also if there is a suspicion that the particular facility is contravening [by engaging in one of the so-called prohibited actions in the bill] – and there’s a long list of those that are in the bill – then [the inspectors] may even go as far as closing that facility.

So the powers are very broad.

DUDU RAMELA: We understand, according to Agbiz, that this bill is already overstepping what is in the current legislation, because it could impose demanding conditions on any licence holder – including requirements for management, control, ownership, sustainability, supporting culture, and fair employment – which are already there. How should we understand this?

ANNELIZE CROSBY: Yes. The licences it seems will be subject to three kinds of conditions.

One of these is environmental conditions that can be imposed.

Then there are transformation conditions that can be imposed.

And then there are what are called ‘efficiency considerations’ as well.

In terms of transformation and the protection of the environment, there is existing legislation. We have the BEE legislation that regulates transformation in all sectors of the economy, and we also have the National Environment Management Act that deals with the environmental considerations.

We are concerned about the duplication of some of those provisions in this legislation, and the confusion that that will cause in terms of who is then responsible for enforcing them.

DUDU RAMELA: From your engagement – because you mentioned a little earlier on that you do not think that farmers or some farmers are even aware of the bill, so a massive communication campaign will have to get under way – [but] from those you have spoken to, what has been the temperature?

ANNELIZE CROSBY: I think mostly the producers are surprised at this point in time that there is such a requirement coming.

I think the majority are completely unaware of this – and concerned of course, because it’s going to place an additional administrative burden on them; and an additional administrative burden means financial implications for their businesses as well.

DUDU RAMELA: Storage facilities cannot be moved, and you’ve already got the Department of Labour which visits farms. Is there a friction point here? Should maybe this then be just given to the Department of Labour to do?

ANNELIZE CROSBY: No, because it doesn’t have anything to do with labour legislation at all.

DUDU RAMELA: Alright. Thank you so much for helping us understand that. So, maybe just in closing up the conversation, how did the consultation process go? What happens now?

ANNELIZE CROSBY: Luckily the consultation process is still ongoing, so there would be further opportunities.

The department indicated at the last meeting that they would now take all the inputs into consideration that they received at a previous consultative meeting, and they would give feedback on that. So that is the next step.

They have also said that they are open to bilateral engagements with specific sectors who request that.

Thereafter there will be a Nedlac process, where all our of the Nedlac constituencies will also engage on the bill and go through the bill, clause by clause.

Only thereafter will we have the parliamentary process where, once again, there will be opportunity for [engagement] and submissions and hopefully oral presentations to the parliamentary committee as well.

DUDU RAMELA: So this could only be years in the making if it goes through.

ANNELIZE CROSBY: Yes. It is quite a lengthy process.

DUDU RAMELA: Thank you so much for your time this evening. We really appreciate it. That was Agbiz head of legal, Annelize Crosby.

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