South Africa's proposed shift from voluntary to mandatory strategic petroleum stockholding may strengthen protection against fuel supply shocks, but will require importers to finance more stock and risk trapping the working capital needed to keep trade moving, says cross-border financial technology firm Verto.
The dual-obligation model detailed in the gazetted Draft Strategic Petroleum Stocks Policy requires State strategic stocks equivalent to 60 days of net imports that will be managed by the South African National Petroleum Company, and 21 days of mandatory stocks for licensed wholesalers and importers.
“The policy direction is clear: more inventory will need to sit in the system for longer. That strengthens physical resilience, but it also ties up cash, increases financing and storage requirements and extends the period in which importers are exposed to exchange rate movements,” points out Verto CEO and co-founder Ola Oyetayo.
The gazetted draft says petroleum imports can take 21 to 42 days to reach South African ports, followed by another 10 to 14 days for offloading, refining and transport to inland markets.
Under the draft policy, private industry will be responsible for maintaining mandatory stocks, which would carry inventory, storage and financing implications for affected businesses.
