Impact of government decision felt in Algoa Bay

Economic loss will burden region

The South African Revenue Services (SARS) shut off the business of Algoa Bay bunkering on 14 September this year.  That single edict by SARS has killed the business streams of upwards of 50 direct companies and organisations living off the economic activities which support the offshore bunkering industry. 

Some 40 companies were created simply to meet the demands of this sector.  Thousands of locals in Algoa Bay region suddenly lost their income, hopes, investments, and the opportunity to realise their potential.

Within a week of SARS action, there was not one ship booked to arrive in Algoa Bay.  The supporting industry stopped working on that day, now more than two months ago.

A thousand formal employment positions have been created, in direct support, with hundreds more in related sectors, since the first bunker deliveries in Algoa Bay began in 2016.  More than R150 million investment in infrastructure and capital items, by private enterprise, has taken place in the last seven years, to support this nascent industry growth. 

The Algoa Bay bunkering station had become the true half-way replenishment facility for the east-west shipping traffic rounding the southern apex of Africa.

With the obvious and proven successes of offshore bunkering in our Bay, knowing precisely how vital these commercial activities are in this time of need, how could anyone even contemplate the decision to instantly rob the greater population of their income?  The service offering is also, of course, a vital one for passing ships not entering port in need of essential supplies.

Not even a madman could conjure up such a callous thought – it is akin to switching off power to an intensive care ward of a hospital.

Indeed, the bunkering industry had become that vital intervention for the area. It had provided hope to a region where unemployment levels had become critical. People had begun to find employment; new businesses grew and foreign revenue helped stabilise the economy. In addition, South Africa’s reputation as a centre for crucial services was elevated as this notable, world-renowned facility developed with almost limitless potential for further ramping and scaling.

Yet, the South African Government, through the offices of SARS, reached out and flicked off the power to the life support systems, snuffing out this proudly blooming and life-giving industry that had become the symbol of hope to the greater community of the Eastern Cape. 

SARS issued an order impounding the convoy of bunker barges and their cargoes.  In one stroke of a pen, the whole economic activity of Algoa Bay was plunged into darkness.  All of the life-saving economic activities of having foreign ships paying for the widest range of services out of South Africa and the impoverished Eastern Cape in particular, were just switched off, snap – like that!

Responding to the needs of the market and committed to providing a professional service to the international market, we launched our first locally designed and built specialist Off Port Limits (OPL) service vessel for Algoa Bay in 2022. An additional two new service boats followed this year, bringing our Port Elizabeth OPL fleet to four high capacity and fit-for-purpose service craft. 

We have not been alone in this investment as 14 other service vessels have joined the convoys conveying goods and services to the international ship traffic calling in the Bay.

Ever hopeful of a return to service, OMS maintained full-service capacity, with all our staff on full pay, incurring all lease, maintenance, insurance and operating costs.  No private enterprise can withstand such an enduring financial hit.

Reacting to the fallout in Algoa Bay

Sadly, our decision to take the hard resolution to close our operations in Port Elizabeth is not likely to be isolated as other companies seek to either downscale or shut down completely to mitigate ongoing losses.  

With a staff of 24 to run our four vessels and shore operations, OMS has a considerable staff complement in Algoa Bay.  To meet the anticipated growing opportunities of work in the Bay, OMS had planned to double this complement, providing two crews per vessel – essential for around the clock operations. 

Even these new recruits have lost their career opportunities, which was to be supported by a significant training budget that would see some 20 new entrants progress through their initial training to become STCW qualified Able Seafarers, Skippers or Masters under 200 GT, or Chief Engineers. 

Where possible, our staff will be offered employment in our other branches and enterprises.  Those who do not find such opportunity, will be supported in seeking alternative employment.  But this will not be easy, as every other related enterprise has been rocked by this apparent government decision to commit economic suicide.

Can we resuscitate the sector?

Even if the crazy decision is reversed and the power switched back on, those who died due to the life support being switched off, remain dead! 

Should a miracle arise and the ban on offshore bunkering be lifted, it is not likely that Algoa Bay will return to commercial activity within a period of six weeks.  That would represent a solid five months of incurring full costs, with negligible revenue for all of the affected companies. 

In addition, the decision has most likely resulted in irreparable damage to South Africa’s reputation to provide OPL as well as bunkering services on an uninterrupted basis and offer these critical replenishment activities to international shipping.

Despite this setback, OMS will continue to support the growth of the ocean economy and will remain committed to showcasing the strengths of South Africa’s maritime offerings to the global industry. Sadly, however, this seems unlikely for operations in Algoa Bay.

PHOTO: The OMS Dominant left the Port of Port Elizabeth on Friday afternoon after Offshore Maritime Services took the decision to close their branch following the termination of the offshore bunker supply operations in Algoa Bay which has impacted on a number of downstream operations including the Off Port Limits operators. 

Session aims to establish model for measuring the ocean economy Africa’s IMO IOUs could impact Council elections