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IBIA calls on South Africa to develop its bunker market

IBIA calls on South Africa to develop its bunker market
The International Bunker Industry Association (IBIA) has urged the South African government to realise the potential of its ship refueling industry and develop the bunker market to an international level.

Peter Hall, chief executive of IBIA, noted that while more than double the number of vessels move around the Cape of Good Hope than transit the Straits of Gibraltar, South Africa's bunkering market has shrank while Gibraltar's continues to grow.

Last year around 600 ships a day passed by South Africa but bunkers sold in its Durban port hit a 20-year low of 1.1m metric tonnes. Sales this year are expected to drop further, Hall told delegates at the African Ports Evolution conference held in Cape Town on Tuesday.

IBIA has advised the African nation to open up its bunker market and produce fuel in line with global carbon and sulphur content restrictions, adjust its fuel pricing structure to be competitive against South American and Asian ports, and create safe offshore refuelling areas.

South Africa can explore partnerships with neighbouring countries for crude cargo purchasing and keeping its port tariffs relevant and competitive to revitalise the ailing marine fuel industry, according to Hall.

“The annual gain of an additional 900 ships a year in Durban, for example, would contribute and estimated ZAR2.4trn ($230.4bn) a year to the South African economy, excluding the value of bunker sales,” he said.

The reasons for South Africa's decline in bunker sales are numerous, including limited fuel storage facilities and slow refinery turnarounds. More the aging refineries are unable to produce low-sulphur 380 cst bunker fuel which is required by most shipowners.

In addition, port dues and bunker prices are high, the supply of fuel via offshore barges is banned, and there is little competition in the market with only four bunker suppliers.

“Bunker vessels are just too low on South African ports' list of priorities. There is currently limited port berthing for bunker vessels in all ports with vessels being dealt with on a first-come-first served basis. And all too often the focus has been on developing container facilities rather than bunkering facilities in recent port upgrades,” Hall said.