Department of mineral and energy rejects Eskom’s application for diesel licence

The department of minerals resources and energy has turned down Eskom’s application for a diesel wholesale licence.

It is reported that the DMRE has rejected the embattled power supplier, Eskom’s bid to acquire a licence for diesel.

Eskom sent its application for the licence to import its own fuel so that it could buy diesel at the basic fuel price – instead of the wholesale price.

News24 reports that this would reduce the price from about R23 per litre to around R16, according to outgoing CEO André de Ruyter’s sentiments.

The diesel licence would have saved the power utility, Eskom around R3 billion on fuel costs over the past year or so.

Additionally, the state-owned power supplier may still appeal the decision to Gwede Mantashe, Minister of Mineral Resources and Energy but he is yet to receive the appeal per DMRE.

“The DMRE confirms that Eskom has applied for the diesel wholesale licencse (sic), however, it was not awarded since the application did not meet certain requirements, the details of which have been shared with Eskom as the applicant,” it said.

“With regards to claims that there is a potential saving of R6 per litre between the Basic Fuel Price and the Wholesale price, the DMRE would like to indicate that the R6 is mainly made up of taxes that the DMRE has no control over.

“However, if Eskom wants to be exempted from paying taxes which includes the Fuel Levy and Road Accident Fund Levy, Eskom should approach the relevant authorities.”

As things stand, Eskom only relies on PetroSA for diesel to supply its open-cycle gas turbines, which often play a critical role in buffering South Africa from more adverse stages of load shedding.

In a statement on Thursday, the DMRE said that to import petroleum products directly, Eskom would need a licence including import infrastructure and adequate storage facilities which they currently do not have.