Categories Business Tech World Crisis in Ukraine could lead to more tax shedding with looming fuel shortages Post author By vanirexodus Post date March 9, 2022 No Comments on Crisis in Ukraine could lead to more tax shedding with looming fuel shortages The crisis in Ukraine poses an even greater threat to South African peace of mind than rising fuel prices – it could also lead to fuel shortages and rationing, as well as more tax cuts as Eskom struggles to cope with the rising costs of running its gas turbines. to hold. Energy analyst Ted Blom warned yesterday of “a fuel shortage starting July 1, due to the closure of oil refineries in Cape Town and Durban by the end of June”. While Blom didn’t believe rationing was in order, other countries in Europe had been preparing for potential fuel shortages, in addition to crippling… The crisis in Ukraine poses an even greater threat to South African peace of mind than rising fuel prices – it could also lead to fuel shortages and rationing, as well as more tax cuts as Eskom struggles to cope with the rising costs of running its gas turbines. to hold. Energy analyst Ted Blom warned yesterday of “a fuel shortage starting July 1, due to the closure of oil refineries in Cape Town and Durban by the end of June”. While Blom didn’t believe rationing was in order, other countries in Europe had been preparing for potential fuel shortages, in addition to crippling price hikes for petrol, diesel and gas. “I don’t think fuel rationing is an issue at the moment because there’s plenty available at the moment — it’s just the price increase that’s a strong factor,” he said. Over the past decade, Eskom had become increasingly dependent on open-cycle gas turbines (OCGT) to complement the energy mix. The parastatal’s chief financial officer, Calib Cassim, predicted that Eskom’s diesel consumption could be somewhere in the neighborhood of R9 billion by 2022, including fuel for two independent power generators. Although Eskom had not yet taken into account the increase in oil and gas resulting from the invasion, from a liquidity perspective it could only afford a certain amount. “We are looking at options to hedge diesel and heating oil prices in the future. The timing couldn’t have been worse, but we’ve already started those discussions,” Cassim said. If the oil price were to double, that would have consequences for the electricity supply of diesel. This could prove disastrous as Eskom relied heavily on diesel-generated power, especially during unit outages. Last weekend’s system outages have caused Eskom to run 17 OCGT just to prevent dam levels from deteriorating. Blom said coal scarcity was also “no problem”. ALSO READ: Solidarity asks government to deregulate and lower the price of petrol Amid concerns that South Africa’s best-quality coal is being exported rather than stored to boost Eskom’s coal-fired power plants, Blom said the export of coal was not suitable for Eskom’s needs. “The export coal has turned out to be too strong, it can burn the factory boilers,” Blom said. “While Eskom still has access to sufficient coal, the problem is the price it pays to suppliers when purchasing the raw material – the situation at the Duvha power station is an example of this.” The loss-making Eskom had paid exorbitant prices to coal suppliers for years, with a total cost of R58. 5 billion – representing 38% of electricity operating costs. This has erased its bottom line, forcing it to request bailouts from the government. Peter Baur, an economics professor at the University of Johannesburg, said rising diesel prices could pose problems for Eskom. “The cost of buying additional fuel at rising prices could put additional pressure on Eskom and the economy,” he said. “There are also structural failures, poor maintenance and other persistent problems. “It is likely that we will lose more burden, especially as we struggle to maintain the existing energy infrastructure. “A lot depends on managing the crisis.” Rising energy demand in wealthier economies – especially given the conflict between Russia and Ukraine – “may continue to exacerbate the resource flow challenge”. There was a high probability of further fuel price hikes “but there is also a chance that if world prices adjust as a result of possible supply adjustments, prices could fall below that limit,” he said. “It depends on whether Opec [the Organisation of the Petroleum Exporting Countries] and other suppliers, such as the US, are willing to increase the supply.” The impact on South Africa’s poorest sectors, food production, retail tourism and hospitality, would be more adverse. “As we try to recover from a massive debt burden, the crisis could weaken overall expected economic growth,” Baur said. The director of the Wits Business School Energy Leadership Center, Dr. Rod Crompton, said higher oil prices and concerns about energy security “were good reasons for the government to switch support for old technology to new electric vehicle technology.” . “Electric vehicles are taking advantage of local resources – wind, solar and coal, battery feedstocks – to replace petroleum, SA’s largest import,” he said. † [email protected] Vanir-exodus.co.za ← Parklane Radiology is the only breast imaging center in Africa → Pfizer Vaccine Side Effects and Digital Vibes Leave a Reply Cancel replyYour email address will not be published. Required fields are marked *Comment * Name * Email * Website Save my name, email, and website in this browser for the next time I comment.