Offshore bunkering under the spotlight during industry roundtable

Is South Africa open for business?

SOUTH AFRICA: Offshore bunkering and ship-to-ship (STS) transfers came under the spotlight at yesterday’s stakeholder roundtable hosted by the South African Maritime Safety Authority (SAMSA) in Durban as attendees debated the environmental risks versus the economic opportunities amidst calls to reinstate operations in Algoa Bay.  

Plagued by controversy for some time, the offshore bunkering operations in Algoa Bay came to an abrupt halt last year September when the South African Revenue Services (SARS) impounded vessels under Section 88(1)(a) of the Customs and Excise Act, 91 of 1964.

Judgements in two different court cases involving Algoa Bay bunker operators were handed down earlier this year.

At the end of January, South African Marine Fuels (SAMF) won their case seeking relief from SAMSA who suspended the company’s approval to conduct operations in 2021. SAMF contended that SAMSA had acted irregularly in enforcing a requirement to appoint a stipulated BEE shareholder.

The judgement handed down in the Gauteng Division of the High Court agreed that the authority did not have the power to impose the shareholding requirement.

Seeking relief against the detention of three of their vessels, Heron Mauritius and Heron Marine’s application was dismissed with costs in the Eastern Cape Division of the High Court at the end of February. Heron had been operating five vessels in the offshore bunker industry in Algoa Bay since October 2020.  

Speaking on behalf of SARS at the roundtable, Wayne Broughton, Chief Litigation Officer, said that stakeholder engagements with the bunker operators had been ongoing prior to the shutdown of the Algoa Bay station. He also noted that, while the relevant clauses within the Customs and Excise Act are undergoing amendment, it is difficult to provide certainty and clarity on the matter.

Amendments will make provision for the licencing of barges as sea-based storage of crude oil and help define the levies applicable to the sector. The draft rules, which were published in December last year initially closed for public comment in January. Broughton confirmed that, due to an “enormous amount of written responses”, an amended draft was currently open for further comments until 10 May 2024.

Talks at the roundtable also highlighted that the establishment of the offshore bunkering operations, although admirable in terms of its ability to drive much needed economic growth for the region, was lacking in instituting robust inter-departmental coordination and environmental reviews.

Environmental issues

Describing Algoa Bay as the “worst possible place” to initiate offshore bunker operations, Feroza Albertus of the Department of Forestry, Fisheries and the Environment (DFFE) admitted that the department was not fully equipped for the launch of the sector. “We were not fully prepared to take this on. This was a new activity and was not regulated in a manner that it should have been,” she said.

With several conflicting users, Algoa Bay’s ocean space is highly contested across the tourism, environmental, fishing and shipping sectors.

Albertus maintains that SAMSA’s requirements for aspirant offshore bunker operators focussed on operational stipulations and did not include sufficient environmental requirements. Real engagement between SAMSA, Transnet National Ports Authority (TNPA) and DFFE around mitigating risks appears to only have commenced after the fact.  

In November last year the TNPA released a draft Environmental Risk Assessment & Management Plan that aimed to identify all environmental, social and maritime risks as well as develop management plans and procedures to govern the operations in Algoa Bay.  

In addition, an Offshore Environmental Working Group consisting of NGOs, government departments and industry stakeholders is now working within the space to help mitigate the environmental risks associated with offshore bunkering including oil spills as well as noise from increased ships’ traffic.

The fact that the environmental assessment was completed after the fact for Algoa Bay has been recognised by all stakeholders as a mistake that will not be repeated in the establishment of future potential bunkering locations that could include Mossel Bay and Saldanha Bay.

Resuming operations

Understandably high on the agenda for most roundtable participants was the need to resume offshore bunkering operations. The rerouting of ships around the Cape of Good Hope in a bid to avoid the volatile situation in the Red Sea has provided an opportunity for the country to offer maritime services to an expanded market.

Voicing their frustration at the lack of government response to urgently address the situation in Algoa Bay, many quantified the lost economic benefit that is being magnified by increased ships’ traffic. Currently the passing ships are opting to bunker in Mauritius, Namibia and even Cape Verde as they bypass South Africa.

During the question-and-answer session, Godfrey Needham of Offshore Maritime Services (OMS) asked why compliant operators such as AMSOL and Linsen Nambi could not resume the Algoa Bay operations as an interim measure to attract business back to the South African coastline.

“We need to send a message to the international shipping community that South Africa is indeed open for business,” said Unathi Sonti, chair of the Maritime Business Chamber who articulated the sentiment of the room as he called for a solution to the matter.

Interestingly, after a full day of debate and some obvious frustration from participants, Tau Morwe, Acting CEO of SAMSA closed the session by advising operators that it was as simple as checking TNPA and SARS compliance boxes in order to take up position in the bay.

According to Morwe, the conditions are in place for anyone to apply for SAMSA approval and, subject to TNPA and SARS compliance, gain access to the market.  “There is nothing preventing operators from conducting operations. That is the state of affairs,” he said, adding that SAMSA was currently processing two new applications.

“By next week or in the coming week, there is a company that will most probably continue to do business,” he said rather flatly.   

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