The government’s attempts to crack down on diesel adulteration have created a regulatory gap that limits legitimate the aviation industry’s ability to store fuel, leading to constraints at South Africa’s airports.
This gap is also exposing industry stakeholders to avoidable compliance issues such as administrative penalties and forfeiture threats, which disincentives investment.
This is according to the Fuels Industry Association of South Africa, which recently commented on the reports of Jet A-1 fuel supply constraints at Cape Town International Airport.
It stated that these constraints are not the result of a fuel shortage and can be attributed to administrative issues.
The association noted that aviation kerosene is chemically similar to unmarked illuminating kerosene.
This means that aviation kerosene can, theoretically, be mixed with diesel.
“Because of this similarity, government policy has long recognized the need to prevent diesel adulteration,” said the association.
Diesel adulteration is the illegal practice of mixing diesel with cheaper fuels, such as kerosene and paraffin.
Unscrupulous fuel retailers do this to dilute their diesel and scam customers while pocketing the savings, but this leads to serious problems for consumers as the tainted fuel can damage their engines.
Diesel adulteration refers to a practice that defrauds the fiscus, undermines compliant operators, damages engines, and distorts the fuel market, reported Daily Investor.
“To prevent such misuse and curb diesel adulteration, unmarked illuminating kerosene is taxed at the same rate as diesel, ensuring duty harmonisation between the two products,” the association explained.
In contrast, the illuminating kerosene available for household use is marked with an invisible tracer called Authentix A-1, which allows the authorities to detect when it is being mixed into the diesel pool.
“Marked illuminating kerosene, therefore, does not attract any duties or levies. Similarly, aviation kerosene used as aircraft fuel does not attract duties or levies.”
The issue is that Jet A-1 fuel used on domestic flights is subject to VAT, while the aviation kerosene used for international flights is zero-rated.
The association explained that these duty structures exist to protect the diesel tax base and maintain environmental and fiscal integrity.
“They do not imply any non-compliance by the industry or any duties owed,” it said.
“Moreover, members of the Association collectively collect and pay over R140 billion annually to SARS in customs and excise duties, fuel levies, the Road Accident Fund levy and VAT.”
A headache for airports
The association noted that the Jet A-1 fuel supply issues at Cape Town International are not related to duties or levies owed to the fiscus, nor are they the result of security or supply concerns.
“The challenge arises instead from unrealistic registration requirements that are misaligned with long-standing industry practices – an issue that has been known to the authorities for some time,” it said.
“This is an administrative matter, not a fuel shortage problem. At the heart of the present vulnerability is a long-standing regulatory gap within the Customs and Excise Act.”
There are regulations that govern the registration and movement of aviation kerosene to and from warehouses.
However, these rules to not provide clear guidelines or a registration process for independent storage operators that want to store duty-free aviation kerosene.
Consequently, independent storage providers have struggled to obtain the necessary registration to store aviation kerosene, even though they play a critical role on the industry’s supply chain.
According to the association, this lack of regulatory clarity has two key consequences –
- It threatens existing Jet A-1 infrastructure in Cape Town, Durban, and East London, and may constrain new investment in additional aviation kerosene storage at key strategic hubs such as Cape Town International
- It exposes industry operators to avoidable compliance risks, including administrative penalties and potential forfeiture threats, creating uncertainty for companies that provide essential storage capacity for aviation kerosene
“In the association’s view, this situation creates undue risk to the importation and availability of aviation kerosene, as companies may become reluctant to engage in storage or import activities while the registration pathway remains unclear and potentially punitive,” it said.
“We reiterate that this is a solvable administrative issue. With urgent, coordinated action by SARS, normal operations can be restored swiftly, protecting South Africa’s aviation connectivity, tourism sector, and broader economic activity.”
“The association remains fully committed to working with all stakeholders to maintain continuous and secure aviation kerosene supply to all the airports in the country and will continue to provide updates as information becomes available.”
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