14 September 2016

Statement from Puma Energy in response to Public Eye report on fuel quality in Africa

14 September 2016 - As a major fuel supplier in Africa, Puma Energy welcomes Public Eye’s call for a tightening of fuel quality specifications in African countries, and will continue to support co-operation between governments and industry to achieve this goal.

Puma Energy has a strict policy of delivering petroleum products that meet the specifications set by national regulatory authorities. Permitted sulphur content in fuels varies from one country to another, and it is important to recognise that such regulatory requirements are a matter for national governments to determine, and not for the companies supplying these markets. Permitted sulphur content depends partly on the technology and age of vehicle fleets and equipment in these countries. Contrary to the simplistic and misleading assertions in Public Eye’s report, it is simply not possible for individual companies to supply fuel to a higher specification than that imposed by the national regulator, not least because in many of these markets fuel is supplied at uniform quality through a single logistical supply chain.

As a member of the African Refiners Association (ARA), Puma Energy supports efforts by national governments in Africa to reduce permitted sulphur levels in fuel and welcomed the agreement last year by five East African countries to introduce a lower-sulphur specification for diesel. We also support the discussions currently underway between the ARA and the Economic Community of West African States (ECOWAS) about implementing the ARA’s Africa Fuel and Lubrication (AFRI) specifications in West Africa, and when the process is concluded Puma Energy will of course comply with the new specifications established. It is unfortunate that Public Eye makes no reference to this co-operative effort aimed at producing a substantive answer to the problem it has identified.


Q and A from Puma Energy concerning Public Eye report on fuel quality in Africa

Q. Public Eye accuses fuel distributors operating in Africa, including Puma Energy, of “dumping” low-quality fuels with high levels of sulphur and other toxic ingredients in African countries. How does Puma Energy respond to this claim?
A. This assertion is not correct. Fuel quality standards are a matter for national governments, which tightly regulate fuel prices as well as content. It is the strict policy of Puma Energy to supply fuel that meets national quality specifications in all the markets where it operates.

Q. Do fuel distributors have an interest in keeping quality standards down in Africa to maximise profits?
A. On the contrary. Puma Energy, as a leading fuel distributor in the region, has an interest in raising fuel quality standards as a key differentiator in the market-place. It has invested very significant sums in recent years in upgrading the supply chain and distribution infrastructure in Africa, precisely in order to be able to benefit from rising quality standards as they evolve – as indeed they already have in eastern and southern Africa. But it is simply not possible for companies importing and distributing fuel to markets unilaterally to vary quality standards. In many African countries fuel supplies are still commingled in a single supply chain. Furthermore, African fuel markets are overwhelmingly driven by price considerations, so in the absence of effective regulation and control higher-quality fuel would be swiftly undercut by cheap competition. 

Q. Given the findings of this report, will Puma Energy change its supply strategy and supply cleaner fuels to African countries? 
A. As the African Refiners Association (ARA) has pointed out, if suppliers were to follow the recommendations of Public Eye’s report, their role would be filled by traders from other countries who would supply fuel required to meet the official specification. In consequence nothing would change on the ground. 

Q. Given the proven health damage from pollution in African countries, can nothing be done to improve fuel quality?
A. Poor air quality in African cities is a serious issue which demands action by governments. But achieving change is a complex challenge and needs time. It is worth noting that Europe had standards similar to those in Africa today until the early 1990s. It took European countries 25 years to arrive at their current low-sulphur standards for fuel, and the effort involved significant investment in upgrading the region’s infrastructure and the closure of numerous refineries. 

Q. What is Puma Energy doing to address the issue?
A. Puma Energy supports the ongoing work of the ARA to improve fuel quality. There has been some progress. For example, African countries have largely eliminated lead from petrol in the last 10 years. As the report acknowledges, a number of East African countries have recently moved to lower sulphur content. Public Eye’s research is focused on West Africa but inexplicably fails to mention the efforts also underway to improve fuel specifications in the countries of the Economic Community of West African States (ECOWAS). Working with the United Nations Environment Programme and the World Bank, the ARA has established a clear road map to raise fuel quality across Africa in coming years. Puma Energy is investing significantly to improve the supply chain (storage, transport, service stations) and promoting quality of products and services to customers. 

Q. Why is progress in improving fuel standards in Africa so slow?
A. One of the challenges is the need to upgrade African refineries, which typically produce diesel fuel with sulphur levels up to 3000 ppm. Reducing sulphur levels would require very substantial investments by state-owned refiners that would likely render the industry unviable. As the ARA points out, “when faced with a choice between implementing lower specifications and closing a large employer, governments have, to date, chosen to maintain fuel quality at current levels”.