- Low-income earners bear the brunt of fuel shortage
- Oil companies are looking at downgrading UPL 95
- Some fuel stations now offering ULP 95 at the price of ULP 93
- Say they are mindful of affordability issues
- 93 is the most widely used
The Botswana Energy Regulatory Authority (BERA) has announced that the sale and use of unleaded petrol 93 (ULP93) in Botswana will be discontinued effective 15th February 2025. The Authority highlighted that most petroleum products in Botswana are sourced from or through the Republic of South Africa (RSA), with smaller quantities from Namibia and Mozambique. Over recent years, refining capacity in RSA has significantly declined due to aging refineries and the substantial investments required to upgrade them for producing cleaner fuels. This has led to the closure of some major refineries.
ULP 93 is a widely used fuel in the country, accounting for the majority of the total consumption, according to available market data. This type of fuel is primarily consumed by low-income earners and businesses. Botswana Oil which imports 90 percent quota issued a statement on Thursday confirming the shortage of ULP 93, saying this was due to circumstances beyond its control.
Available data further shows that the country has an annual consumption of approximately 1.2 billion litres (equivalent to 120 million litres monthly).
NATREF which produces up to 60 percent of its gasoline as unleaded 93 octane, shuts down its site every year. It issued a statement about three months ago on the impending move. NATREF is the only producer of ULP 93 in the Southern African Development Community (SADC) region and has been on shutdown since May 2024 for planned annual maintenance. It was due to return to full production at the end of June 2024 but this has not gone according to plan.
In May, Botswana Oil (BOL) assured the market about the availability of its product to meet the country’s demand. It indicated that there will be enough fuel to meet demand for the next three months that has been secured from two major suppliers in South Africa and other suppliers in Mozambique and Namibia.
“BOL long aligned with the refinery prior to the shutdown for stock build-ups to ensure continuity of supply during the shutdown,” the organisation had said.
“In addition to this and on the backdrop of challenges that may result from refinery shutdown, BOL has aligned with key stakeholders in government to allow for securing contingency volumes from the alternative routes from Mozambique and Namibia until the end of September 2024.”
NATREF refinery extended its supply suspension due to delayed maintenance which was scheduled for completion in June. As far as BOL was concerned in May, there was no current or imminent fuel supply challenge in Botswana.
“The allegations of an impending fuel crisis, in our view, are misinformed and mostly likely exaggerated,” BOL previously said when speaking to this publication.
Botswana, historically spared from fuel shortages due to oil marketing companies’ stockpiling practices, now confronts challenges stemming from new regulatory adjustments. Under these changes, oil marketing companies are mandated to procure fuel primarily from Botswana Oil, which has encountered initial implementation difficulties. Unlike previous practices where additional supplies could be sourced by OMCs from Zimbabwe during stockpiling periods, BOL’s recent assumption of the majority import quota reveals a lack of established procurement networks in the region.
Observers attribute these developments to BOL’s relative inexperience in managing robust sourcing relationships.
Addressing the issue of the ULP93 shortage, Botswana Oil said the two major alternative routes of Namibia and Mozambique which supply petroleum products do not use ULP 93 and only use ULP 95.
“This makes it difficult for these suppliers to supply anyone in the region with the ULP 93 petrol grade. In any case, their storage facilities do not have provision to store ULP93,” the organisation said in a statement.
To mitigate the current shortage of ULP 93, Botswana Oil said it has availed ULP 95 petrol grade in full and in excess to cover for the shortfall. “ We would like to assure the public that ULP 95 is safe for use on all petrol vehicles, including those that have typically used ULP 93.”
This publication established that fuel stations in Botswana are now offering ULP 95 at the price of ULP 93, despite the higher cost, thereby absorbing the margin difference. Botswana Energy Regulatory Authority (BERA) raised fuel prices in April, attributed to rising international oil prices driven by geopolitical tensions and seasonal refinery maintenance reducing supplies. This saw the retail pump price of unleaded petrol 93 rise by 113 thebe per litre. Similarly, unleaded petrol 95 saw an increase of 105 thebe per litre.
Amidst this, other oil companies are looking at downgrading UPL 95. The problem though will be on the slate calculation which needs to be approved by the regulator. Oil marketing companies emphasise their awareness of the financial challenges facing Batswana citizens, who are finding it increasingly difficult to afford the price difference.
Estimates show that about 10 percent of the households have been appraised to have discretionary spending power – meaning the 90 percent
only have enough disposable income to cover the just basic necessities of food, housing and transport. Statistics show that at a national level, households allocate significant proportions of their consumption expenditure mostly to transport, housing costs and food.
Statistics Botswana has shown that the formal sector average earnings per month were estimated at P7 396 for citizens, P15 863 for noncitizens and P7 692 for all employees in the third quarter of 2023. The average monthly earnings for all employees are estimated to have increased by 13.1 percent or P889 from P6 803 estimated for the fourth quarter of 2022. Average earnings for the informal sector were estimated at P2, 292 for males, P1, 791 for females and finally, P2, 142 for all employees.
