Pipeline fuel thefts skyrocket in South Africa

In December 2019, two Zimbabwean nationals were arrested while transporting R3 million worth of stolen fuel from the Free State to Gauteng, South Africa.¹ Days later, a section of a fuel pipeline caught fire in Alberton, Gauteng, after it had allegedly been tampered with during a theft.² The illicit trade in fuel, which poses significant environmental and public-safety risks, has surged in South Africa in the past year and is prevalent throughout southern Africa. It suggests the emergence of a new criminal market in South Africa and poses a threat to the country’s farming and transport economy as well as a serious public safety hazard.

143 incidents reported in 2019/20

Before 2019, fuel theft from pipelines in South Africa was scarce: there were just two incidents in the 2018/19 financial year involving the Transnet pipeline network, the largest operator of South Africa’s fuel pipelines, and none in the preceding two years.³ However, in 2019/20, 143 theft incidents were reported and 10 million litres of fuel stolen.⁴ Refined products, especially diesel, are the main targets, as crude oil is not very useful in its unrefined form.⁵ Incidents have continued in the 2020/21 year: in spite of a brief disruption due to the coronavirus pandemic, there have been 54 confirmed thefts and a loss of 4 million litres as of mid-August.⁶

Oil thieves drill into the pipeline and then transfer the fuel into containers or industrial-sized tankers. The puncture left behind is often left unsealed, meaning that fuel continues to flow after the theft, which presents a serious risk of fire, as seen in the Alberton incident.⁷

Besides the safety and environmental hazards, food security is threatened by hampered supply. During the early stage of the coronavirus lockdown, fuel imports to South Africa were slowed by travel restrictions, draining the country’s fuel reserves.⁸ Incidents of theft compounded this shortage, leaving farmers, who rely on diesel, short supplied.⁹

Where fuel stolen in South Africa ends up is a matter of debate. Richard Chelin, of the Institute for Security Studies in Pretoria, believes that unlicensed service stations in South Africa could be a primary point for the sale of stolen products, and that at least some of these stations are owned by taxi drivers.¹⁰ South Africa’s taxi industry is known for criminal activity, so this may suggest that the industry is a prime driver of fuel theft.

Transnet believes that most of the stolen pipeline fuel remains in South Africa, but that at least a portion exits the country.122 Unlicensed outlets are likely points of sale for stolen fuel, with farmers and mining companies the possible buyers, Transnet group CEO Portia Derby said recently. Consumers may not be aware of the illicit nature of the fuel.¹¹ Where foreign nationals have been arrested as part of pipeline-tampering operations, they have often been the drivers of the tankers used during these illicit operations.¹² This could suggest that the tankers follow routes towards South Africa’s neighbouring countries, possibly selling off stolen fuel along the way before continuing with whatever residue is left.

Figure 9 Fuel theft incidents along Transnet pipeline, along with results of investigations into the thefts.

SOURCE: Transnet Pipelines.

Interceptions along borders also suggest that some fuel is smuggled internationally. According to media reports, the Zimbabwean Revenue Authority made close to a dozen seizures at the Beitbridge border post between 2017 and 2020, involving South African-registered vehicles that attempted to smuggle fuel.¹³ One incident in 2018, where an attempt was made to transport R3 million worth of fuel from South Africa to Botswana, involved collaboration between two members of the South African Revenue Service and a police official.¹⁴ This suggests that smuggling operations may be large-scale and sophisticated, and that South Africa may play a notable role in supplying the regional illicit fuel market.

Regional illicit fuel trading

Fuel smuggling across jurisdictions where price differences are notable is a well-established practice in southern Africa. Although much of the trade involves stolen fuel, some is bought legitimately and then moved across borders illegally. The latter is true of fuel smuggled into Zimbabwe from Mozambique.¹⁵ Mozambican diesel marked for ‘key economic areas’ (as determined by the Mozambican government) is subsidized by the state, so that it is more affordable.¹⁶ By contrast, in Zimbabwe’s collapsed economy, fuel fetches a high price, often in US dollars. In 2020, 42 registered companies were under investigation by the Zimbabwean Revenue Authority for suspected smuggling and fraud.¹⁷

Given its high fuel prices, Zimbabwe is a favoured destination for smuggled fuel in the region¹⁸ – from Mozambique, South Africa and Botswana.¹⁹ Some smugglers use boats to carry fuel purchased in Mozambique across rivers that flow into Zimbabwe, such as the Rusitu.²⁰ For larger-scale smuggling, tankers with false documentation – such as marking fuel as commodities that are not subject to duty, like soy oil – are also used.²¹

Tankers transporting fuel destined for regional trading may also have a portion of their load siphoned off and sold on the black market. The remaining load is then adulterated to make up the missing volume, or the documents are altered to show a smaller amount of fuel in the shipment.

Reports of fuel stolen in transit have also surfaced elsewhere in the region, such as the Maputo Corridor, where Mozambique, eSwatini and South Africa converge. The Maputo Corridor Logistics Initiative was established in 2004 to engage the revenue authorities of the three countries, and provide a safe transport route for goods, as well as countering smuggling and encouraging regional trade.²² Before its closure in 2019 due to lack of funding,²³ the Initiative said that large quantities of fuel were lost in transit through eSwatini, South Africa and other neighbouring countries while being transported from Mozambique.²⁴ Due to lack of resources and limited investigative capacity, exact volumes and frequency were undetermined.

Revenue authorities in Zambia have also uncovered large-scale scams involving tankers transporting illicit fuel from Namibia and Mozambique. During one incident in 2018, 60 trucks were seized in Zambia for carrying illicit fuel.²⁵ Again, the Maputo Corridor is a route along which smuggling into Zambia is allegedly common.²⁶

Arrests and seizures

In South Africa, joint operations by Transnet, the Directorate for Priority Crime Investigation and the South African Police Service have yielded results. In 2019/20, 84 arrests were made, along with the seizure of 25 private vehicles and 30 tankers used in thefts.²⁷ For the year 2020/21, 14 arrests and seizures of three private vehicles and eight tankers have been reported as of August 2020.²⁸

In Mozambique, a tracking programme was launched in May 2018 involving marking fuel with an invisible chemical, which allow authorities to more easily identify adulterated fuel.²⁹ Within six months, revenue collection increased by 32 per cent.³⁰ A corresponding 60 per cent reduction in kerosene sales indicated its widespread use as an adulterant, and further indicates a potential decline in adulteration.³¹

Zimbabwean authorities have started escorting tankers to their destination countries to ensure that no fuel is illicitly siphoned off in transit.³² However, how effective this approach has been is unclear.

The sudden rise in fuel thefts, particularly in South Africa, is a new shift in fuel-smuggling dynamics in the region. Smart policy decisions, such as Mozambique’s successful fuel-marking initiative, and greater regional cooperation between revenue and law-enforcement bodies, may prove useful in countering this growing problem.

Notes