South Africa’s Department of Energy estimated that the costs of upgrading the country’s outdated refineries to meet Euro 5 specifications is expected be in the region of US$ 3.7 billion. The figure was derived from estimates given my oil refiners in 2009 and thus only serves as a base figure. Both the refiners and the government will contribute to meeting the cost of upgrade, which must be completed by 2017 to comply with proposed legislation.
A portion of the cost is likely to be passed on to the South African consumer at the pump, although cleaner fuel will enhance efficiency of vehicles, thus reducing dependence on volumes of fuel.
The move to cleaner fuel is also expected to have significant health and environmental benefits.
The chief executive of the African unit of BP welcomed the government’s draft on clean fuel specifications, seeing it as a step towards a clearer regulatory framework in the country. The company is planning to invest US$ 200 million in energy infrastructure in South Africa including storage tanks, pipes and import facilities. BP operates the country’s biggest refinery, the 180 000 bpd Sapref complex, in partnership with Royal Dutch Shell.
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