14 September 2016

Trafigura response to Public Eye report on fuel quality in Africa

14 September 2016 - Trafigura is a leading supplier to a number of markets in sub-Saharan Africa of refined petroleum products that meet national regulatory requirements for fuel, for example by blending materials from different sources. These requirements are imposed by national governments and cannot practically be altered by individual suppliers. We support the efforts already underway under the auspices of the African Refiners Association to lower permitted sulphur content in fuels supplied to African markets. This co-operative effort is the right way to effect necessary change.

CLICK HERE to read a statement from Puma Energy in response to the Public Eye report on fuel quality in Africa.

CLICK HERE to read the response letter from the Executive Secretary of the ARA (African Refiners Association) to Public Eye which provides some factual analysis of their report entitled “Dirty Diesel - How Swiss Traders Flood Africa with Toxic Fuels”.

Trafigura Q and A concerning Public Eye report on fuel quality in Africa 

Q. Public Eye accuses Swiss-based commodities trading firms and their downstream partners of “dumping” low-quality fuels with high levels of sulphur and other toxic ingredients in African countries. How does Trafigura 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. Trafigura supplies fuel that meets national quality specifications in all the markets where it operates. 

Q. Do trading companies and fuel distributors have an interest in keeping quality standards down in Africa to maximise profits?
A. Absolutely not. It is the role of a trading company to provide supplies that meet the required quality specifications as reliably and efficiently as possible. It is not possible for individual companies delivering fuel to markets unilaterally to vary quality standards. 

Q. Given the findings of this report, will Trafigura change its supply strategy and supply cleaner fuels to African countries? 
A. Trafigura’s business is built on supplying its customers with commodities they need to the specifications set by national regulatory authorities. Africa depends on imports for more than 50 percent of its supplies of gasoline, diesel and kerosene, so traders play a vital role in supporting economic growth in the region. As the African Refiners Association (ARA) has pointed out, if Swiss 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 Trafigura doing to address the issue?
A. Trafigura supports the work of the ARA, of which it is a member, 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. 

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”. 

Q. According to Trafigura’s 2015 Responsibility Report, the company supports the UN Guiding Principles on Business and Human Rights. How does supplying harmful fuels to Africa sit with that commitment?
A. We are fulfilling this commitment. The UNGPs require companies to assess direct and indirect human rights impacts from their activities. Where the impact is indirect, as in this case, we have a duty to exercise leverage through business relationships where appropriate and relevant. In this instance, we are exercising leverage through our membership of the ARA and our active support for its fuel quality improvement effort. 

Q. Why does this report focus on the role of Swiss trading companies?
A. Public Eye is a Swiss non-governmental organisation that campaigns for intrusive regulation of global business by the Swiss government. This report, which largely ignores the significant role of companies based elsewhere in supplying African markets, should be viewed in the context of that campaign. The reality is, however, that the important decisions on fuel quality in Africa rest with African governments, not with fuel suppliers or their host countries.