Bunker Supply Shuts Down in Algoa Bay Amid Tax Dispute With South African Government

Algoa Bay is currently the country's largest bunkering location, with an estimated 50,000-100,000 mt/month of sales. File Image / Pixabay

Marine fuel supply at South Africa's largest bunkering location has all but shut down over the past week because of a dispute with the country's government over taxes and custom regulations.

Two out of the three bunker suppliers at Algoa Bay -- TFG Marine and Minerva Bunkering -- have been forced to halt bunker operations at the port after the South African Revenue Service (SARS) detained five vessels including bunker barges last week, a local source familiar with the situation told Ship & Bunker on Tuesday.

The third supplier, BP, has not been affected by the dispute but currently has no availability and is unlikely to replenish its stocks until close to the end of the month, the source said.

A TFG Marine representative said its local partner, Heron Marine, was discussing the situation with the authorities.

"We understand that Heron Marine is in dialogue with local regulators," the TFG representative told Ship & Bunker on Thursday.

"Heron Marine is working with customers to manage their bunkering requirements."

A Minerva Bunkering representative did not respond to a request for comment.

Longstanding Investigation

SARS wrote to local shipping industry representatives in July to announce the findings of a longstanding investigation into the Algoa Bay bunker supply market.

The authority's accusation is that marine fuel cargoes have been delivered from other countries into floating storage facilities off Algoa Bay and sold on as bunkers without first having been properly registered and taxed as imports, rather than transshipped product.

"The conclusion drawn from the audit findings was that vast volumes of fuel being dealt with, either for purposes of local use or export purposes were not dealt with as prescribed, or were not dealt with as declared, and these serious issues of non-compliance translated into a loss of duties/levies to the fiscus," Beyers Theron, director of customs border operations, ports of entry and customs compliance at SARS, wrote in the letter in July.

"To ensure economic recovery and the necessary growth it is essential that all participants in the economy pay their dues.

"As far as those participants who do not play by the rules are concerned, the Commissioner is enjoined by the Act to take the appropriate and necessary steps to ensure their compliance."

The letter in July was followed up by a raid last week in which three bunker delivery vessels, a tanker and an offshore drillship were detained, prompting the shutdown of supply.

The local maritime community in South Africa has been shocked by the impact of the raid. Algoa Bay is currently the country's largest bunkering location, with an estimated 50,000-100,000 mt/month of sales. The removal of South Africa as an option for ships travelling around Africa would have profound consequences for global shipping.

"We are under immense pressure to ensure Algoa Bay does not run dry and is able to continue to supply vessels en route to our anchorage," Unathi Sonti, chairperson of the Maritime Business Chamber in South Africa, wrote in an open letter to the country's government on September 13.

"A marine risk may occur with several vessel not being bunkered, due to unavailability of bunker fuel with only limited suppliers available.

"Distressed vessels pose a severe risk to our coast, as additional government resources would need to activate in case of marine emergency."

Back Taxes

Resolving the dispute may be a complex process, the local source added.

"I think the big issue is going to be settling with the tax authority in terms of taxes that have not been paid and penalties for non-compliance," the source said.

"That's probably the most difficult thing right now before any kind of operations can carry on.

"The tax authority has the opportunity to go back five years and charge retrospectively five years of taxes, which is enormous."