South Africa’s Deputy Director-General of Petroleum and Petroleum product regulation, Tesliso Maqubela, announced that the country’s Department of Energy plans to initiate talks with the petroleum industry concerning the deregulation of liquid fuels, Ecofin Agency Oil and Gas reported.

Maqubela said that deregulation would allow the market to set prices that would encourage investment in upgrading South Africa’s refinery capacity, which would address the challenge around cleaner fuels, according to Business Day. He added that the department is currently working on an integrated energy plan, which will soon be presented to the Parliament and would also present an outline for both imports and the local refining of liquid fuels.

The comments from the Department of Energy came in response to a warning from South African Petroleum Industry Association (Sapia) that without government incentives and cost recovery allowances for investment in making cleaner fuels, the country’s petroleum refining industry will not be able to compete with cheaper imports.

Sapia’s Chairperson, Maurice Radebe, said that imports of 50 parts per million (PPM) diesel and higher-octane petrol were increasing as local refineries cannot keep up with local demand. He added that the introduction of cleaner fuels 2, which implies new lower-sulphur liquid fuels, would require an upgrade to the country’s refineries.