Fuel industry wants higher paraffin prices to combat diesel fraud

The Fuels Industry Association of South Africa (Fiasa) has called for an increase in taxes on marked illuminating paraffin to the same level as diesel in a bid to halt the practice of unscrupulous fuel retailers selling contaminated diesel that can lead to costly engine damage.

Paraffin is almost R6/l cheaper than diesel because there is no fuel levy or road accident fund payable, which has led to some operators mixing paraffin with diesel and pocketing the difference. It has led to unsuspecting motorists experiencing engine damage.

Paraffin does not contain the additives required to lubricate and clean moving parts in modern diesel engines and these components can fail with repeated use of paraffin. The flashpoint of paraffin is also lower than diesel, which could lead to engine failure.

“The only time motorists realise there is something wrong with their fuel is when there is engine damage. The practice of fuel adulteration has been ongoing for more than two decades,” Fiasa executive director Avhapfani Tshifularo told Newzroom Afrika.

“The SA Revenue Service (Sars) started putting tracer dye into paraffin so inspectors could detect paraffin in diesel and we started to record a decline of these activities,” he said.

“But they’ve increased again significantly in the past five years, predominantly because the differential between the price of paraffin and diesel gives incentives to unscrupulous operators. We must target that incentive by imposing the same tax on paraffin as diesel.”

Tshifularo acknowledged an increase in the paraffin price was controversial and would be a concern especially for people who use paraffin for heating and cooking, but said Fiasa’s proposal was to recycle that revenue to support the indigent people who used paraffin.

Sars recently said it had identified a major player in the multibillion-rand illegal diesel blending market after shutting down two depots in Limpopo and Gauteng where it suspected paraffin was being mixed with diesel on an industrial scale.

The facilities in Meyerton and Louis Trichardt are owned by Alliance Fuel, which the tax agency said was the brainchild of businessperson Walter Gilfillan.

At the beginning of the year the department of minerals and energy said it would increase random fuel quality tests at petrol stations in an effort to curb the illegal practice of selling tainted diesel, after identifying at least 70 filling stations selling diesel diluted with illuminating paraffin.

The department did not respond to requests for comment on whether the process was taking place or whether any fuel stations had been caught in the act.

Tshifularo said consumers could protect themselves by buying fuel from mainstream service stations or big brands and looking out for diesel prices that were suspiciously low. He cautioned consumers to be wary of buying cheap diesel.

The wholesale price of diesel is regulated but not the retail price, and can vary by more than R2/l between retailers.

“If the diesel price is way out of line with other operators in the area that should raise a flag. You might want to report it,” he said.

The SA Petroleum Retailers Association (Sapra) has a whistle-blower hotline for motorists to report any suspicions. Sapra said motorists were most likely to come across adulterated diesel at filling stations or truck stops without a brand or network behind them and diesel wholesalers who illegally sold diesel to the public at fuel depots.

Vehicle warranties do not cover damage caused by contaminated diesel and motorists need to make insurance claims for fuel-related engine damage.