INTRODUCTION
The eagerly awaited White Paper on Energy Policy was published in December 1998. It forms the basis for an energy policy which will benefit all South Africans and mark the move from the energy policies of the past  essentially aimed at over-coming sanctions  to those of the present and future, aimed at nurturing the growth and development of South Africa.
The government states in the White Paper that its policy direction is the deregulation of the liquid fuels industry, but it has set certain milestones that must be met before this move to deregulation will take place. Some of these milestones may prove difficult to achieve.
There may therefore be some delay before deregulation takes place. Whilst this could be the objective of some stakeholders, Sapia believes in deregulation. However, Sapia has a pragmatic approach and can accept a period of continued regulation provided that:
If progress towards deregulation is to be made, a clear process toward achieving the milestones will have to be put in place.
This is especially so in respect of the achievement of the key milestone of a 25% sustainable presence in the industry by historically disadvantaged South Africans.
In the absence of a "big bang" deal this will be a difficult milestone to achieve. Achieving it by the organic growth of emerging companies will take many years. While current government thinking appears to be to put the responsibility of achieving this milestone solely on the business sector, Sapia believes that it will require a concerted and innovative effort by all stakeholders to bring it about.
Questions Sapia puts to government in respect of this, by far the most important of all the milestones, are:
Sapia sets out below what its members have already done to bring about black empowerment. It likewise sets out its views on taxpayer subsidies to the synfuel industry.
Another key area in the deregulation process relates to the structures to be put in place to assist labour and small businesses, including service stations, as the market becomes more competitive.
These are all major matters to deal with that will require leadership from government.
There has been progress on some issues, but most of these are more related to continuing regulation than to preparing for deregulation and include:
Another area where action is needed is the proper regulation of transport tariffs, and the proposed continued prohibition of vertical integration in the service station industry is also of concern to Sapia.
Sapia appeals for clarity on how it is intended to manage the process leading to deregulation. Crucial missing links at present are the absence of any timetable or stakeholder forum at which to discuss implementation.
The important thing in the interim period is keeping the industry in good shape. This will mean maintaining a climate which favours investment and encourages the achievement of government's goals of growth and development, provision of energy to the people, and the attaining of a 25% presence in the industry by the historically disadvantaged.
Sapia is encouraged by government's commitment in the White Paper "to promoting a climate that would be conducive to reasonable profits and sustained investment in the liquid fuels industry." Ultimately it is this investment which is critical to the future well being of the nation, and it is this that policy should seek to encourage.
BLACK EMPOWERMENT
The most important matter Sapia members are addressing is black empowerment within our industry.
They have already helped to create a thriving small business environment in which significant numbers of black people are prominent. The oil companies have acted in a tangible way. The result has been true economic empowerment  and for more than just a few individuals.
Those practical steps in the past have not been enough. For the future, Sapia agrees with the government that much more needs to be done.
All our members support the goal of meaningful, viable Black participation in their industry and are committed to assisting with sustainable initiatives to bring this about. We have offered a Black empowerment package, which includes:
Sapia believes that any transfer of assets from the established oil companies to Black oil companies should be negotiated on a commercial basis between individual companies. We believe that participation by Black companies in crude oil refining has recently been and can be further opened up in the same way. Given the willingness of the oil industry to share its market with hitherto disadvantaged businesses, there is great potential for far-reaching deals to be struck.
SUBSIDIES FOR SYNFUELS
By June 2000 the government has to make a particularly important decision concerning the liquid fuels industry  whether or not the state should continue to subsidise privately owned synfuel production. If it is decided that the subsidisation should continue the terms and conditions thereof will also have to be determined.
During the past decade, while billions of rands of taxpayer money have been paid to a privately-owned synfuel company, the operating profits of that company have been such that it has often been the number one in the Financial Mail's "Top Companies" supplement's list of the biggest pre-tax profit earners. These large amounts of taxpayer funds, raised as levies on the petrol and diesel prices  which could have been used to build schools, clinics and houses or assist black empowerment in the industry  have merely served to enhance further the already good profits of a privately owned company.
Sapia's views on the matter are quite clear, and have been consistently expressed over the past five years.
They are that synfuel production is too valuable a saver of foreign exchange  oil is the biggest item on the nations import bill  and provider of jobs for the operations to lightly be allowed to close down. Thus there is a case to provide bridging support in times of low rand oil prices if the plants would otherwise be closed down. Such bridging support would be repayable, with interest, if and when increased rand oil prices permitted. This would also mean that synfuel production would offer South Africa a partial hedge against movements in world oil prices.
Sapia certainly does not believe that taxpayer funds should be used to add to the profits and dividends of a privately-owned company.
At the time of going to press the size of the levy on the petrol and diesel prices which is used to pay subsidies is 8c/l on all petrol and diesel sales whether produced from crude oil or coal/gas. As synfuel production is only some 40% of total sales this means that up to 20c/l has been paid to the synfuel producers as a subsidy on their production.
Sapia refers readers to the section on the "White Paper on Energy Policy" of the 1998 annual report.
The comments in that section remain valid. In particular the proposed timetable for the implementation of policy and the vision for the millennium.