Government discussions aim to resurrect offshore bunkering

Algoa Bay and additional opportunities on the horizon

SOUTH AFRICA: Sobantu Tilayi, COO of the South African Maritime Safety Authority (SAMSA) admits that the sudden closure of the offshore bunkering operations in Algoa Bay could have been avoided if the relevant government departments had worked more closely with one another.

“We need to give more credence to Operation Phakisa and avoid mishaps such as these,” he told Maritime Review Africa in an interview yesterday noting that SAMSA and the South African Revenue Services (SARS) are currently in discussions to resolve the situation.

“There is a discourse within SARS about turning it around,” he says explaining that the issue relates to a piece of “outdated legislation” dating back to 1964 regarding the import of oil that nevertheless still needs to be complied with.

In September last year SARS detained several vessels operating in Algoa Bay over what was described as “illegal bunkering”. At the time SARS Commissioner, Edward Kieswetter, confirmed that the Revenue Service had been engaging with the industry since 2016 in the terms of the Customs and Excise Act, 91 of 1964 which relates to the importation, trading in and other activities of vessels engaged in the supply of fuel.

Tilayi agrees that the situation has resulted in a reputational loss for South Africa, but hopes that the international maritime industry will take note of the country’s actions to reinstate the service when it becomes operational again.

He is also aware that the closure has impacted on the downstream maritime sector in the Eastern Cape and that some of the industry capacity may be permanently lost.

“It is difficult to say how much of the industry will be left and whether it will look the same as it did before. But we are hoping to rebuild the capacity especially with the additional shipping traffic,” he says highlighting the increase in passing ship trade due to the situation in the Red Sea.

Additional opportunities

Noting the moratorium that was put in place on expanding the operational base of the ship-to-ship (STS) bunker transfer sector in Algoa Bay before its closure, Tilayi says that it was never meant to be restricted to only three players and that, once the risk assessment reports are finalised, there is a likelihood that additional operators may be given licences.

He adds that the moratorium has provided the Authority with the time to consider the interests of all stakeholders including the environmentalists. Additional studies have sought to identify all the risks and highlight a future path for STS operations around the South African coast.

The final draft report undertaken by the Transnet National Ports Authority will close for comment at the end of January.

“It should take another month to a month and half to finalise the outcomes of the report after this,” says Tilayi predicting that, if all concerns can be mitigated, we are likely to see additional players in the market.

According to Tilayi, additional locations are also still on the table for discussion and requests to investigate the feasibility of using St Helena Bay as a second offshore bunker destination are being considered. Other industry-lead requests feature Mossel Bay as another potential position.

“We did not understand all of the risks (when we started) and needed to wrap our minds around it. We have a much better understanding of the risks now and realise too that each potential location will have its own challenges.”

“We did not understand all of the risks (when we started) and needed to wrap our minds around it,” he says admitting that there have been a few incidents since the operations commenced in Algoa Bay. “We have a much better understanding of the risks now and realise too that each potential location will have its own challenges,” he adds.

Noting South Africa’s ambitions to position itself as an international maritime centre by 2030, Tilayi is driven to see SAMSA evolve as a contemporary regulator that fosters economic development – and the opportunity to expand on the impact that the Algoa Bay operations had on the local sector is an important building block for him.

While the timeline to resolve the tax issues raised by SARS is not clear; it is clear that the returning COO is committed to resurrecting the service and rebuilding the country’s reputation.