Many people have questioned whether the BEE and BB-BEE Deals replace Economic Transformation Commitments by the Democratic Government since 1994. At the centre of the contestation between parties and stakeholders is the State-Owned Island View Terminal (IVT) where the Fuel Import & Storage Terminals that are strategic for the country are located. The DoT (Department of Transport) Minister Babara Creecy got an application for Section 79 Directive from the few Oil Majors Companies whose long-term leases have expired since year 2011. The leases have been renewed on a month-to-month since year 2011 when in fact both the land and the assets forming the Top Structure/s were supposed to have been handed over to the State – i.e. Transnet and Transnet Ports Authority (TNPA), according to those familiar with the industry.
What is the Issue?
At the heart of the parliamentary process led by the Portfolio Committee on Transport, Department of Trade, Industry and Competition (DTIC) is the matter relating to the renewal of the land leases on the State-Owned Island View Terminal with privately owned Oil Majors by another 25 years without going out on tender and at the exclusion of the very same beneficiaries of Economic Transformation.
Many argue that BEE (Black Economic Empowerment) and BB-BEE (Broad Based Black Economic Empowerment) that the Oil Majors pride themselves on having achieved, are not one and the same thing as Economic Transformation imperatives of the Democratic State. Far too many people are left behind as the Oil Majors pick and choose whom to empower and whom not to allow into the Petroleum Storage and Logistics Infrastructure of the Petroleum Products inside the State-Owned Ports. Over 50 Economic Transformation Companies are crying foul play due to having been left out of the Section 79 Directive 25 Year Lease Renewals. About 23 of those (out of the 25 that have signed up to form the Association to Represent them) are Wholesalers.
Strengthen the Constitutional & National Security Framing:
From a constitutional perspective, the Island View Terminal (IVT) is not merely a commercial logistics asset, but a strategic national security installation that underpins Section 198 of the Constitution, which places national security as a function of the State and subject to civilian authority. Any long-term alienation or exclusive control of such an asset without meaningful state operational dominance raises material constitutional, fiscal, and defence-readiness risks.
Growing Calls to Either Amend Section 79 Directive or Restart the Process:
Tensions are rising within South Africa’s fuel storage and import sector as black economic-transformation companies warn that the current Section 79 directive issued to renew long-term leases for oil majors at the Island View Terminal (IVT) risks perpetuating the monopolistic control of this strategic national asset for nearly a century in a manner that stifles competition, economic transformation, and national sovereignty.
Industry records show that the first IVT lease agreements were signed in 1959 for a 25-year term, with a clause stating that all immovable assets would transfer back to the state upon expiry in 1984. The oil companies exercised their option to renew for another 25 years, again with the same transfer clause, setting the final termination date for October 2009. Since then, short-term extensions have kept the oil majors in place for an additional 11 years, meaning they have exercised uninterrupted operational control of Island View for 66 years.
The oil majors later applied to the Minister of Transport, Ms. Barbara Creecy, for a Section 79 directive to allow for long-term lease renewals. This route was used instead of other options anticipated by some stakeholders, such as a full state takeover of the asset or a public procurement process under Section 56.
The Minister approved the Section 79 directive, granting 25-year leases to the oil companies. Under this arrangement, approximately 15 percent was allocated to the Central Energy Fund and its subsidiaries, including the planned state-owned refinery, SANPC (South African National Petroleum Company).
The new directive extends these arrangements another 25 years, pushing their total tenure to 91 years, a prospect that economic-transformation groups say fundamentally undermines South Africa’s equity and inclusion goals. They argue that the “future access measures” proposed by the Minister do not adequately include black-owned operators and instead leave transformation dependent on later administrative decisions. In addition, they state that they have evidence of how previous attempts to utilize the uncommitted capacity mechanism have been frustrated by the oil companies.
Their concern is heightened by the Terminal Operator Agreements (TOAs) currently being drafted by Transnet National Ports Authority on behalf of the existing lessees. These agreements are expected to be signed by 30 March 2026, and once finalised, industry players fear that revisiting or revising them will be legally and operationally constrained.
Key Timelines:
The following timeliness are key to fundamentally understanding the Real Issues
- The first lease agreements were signed in 1959 for 25 years with termination clause of immovable assets transferring back to the state in 1984.
- The oil companies had an option to renew for another 25 years, and they did, with the termination date of Oct 2009. This renewal was meant to be final, with termination clause of immovable assets transferring to the state.
- With short term lease extensions of 11 years since 2009 the Oil majors have been controlling IV for 66 years.
- Thus, the current extension takes them to 91 years in control of IV.
Legal experts consulted by transformation groupings argue that the perpetual extensions granted post-2009, without a fresh open tender or a clear transfer of the top structures as originally stipulated, may constitute constructive expropriation of state assets by private entities through administrative action. This exposes the State and Transnet National Ports Authority to long-term litigation, adverse audit findings, and potential constitutional challenges.
Contents of the Real Issues:
At the centre of South Africa’s fuel supply system is a single strategic facility in Durban: Island View Terminal. It now finds itself at the heart of a national regulatory debate.
This article attempts to paint the factual look at how South Africa’s fuel storage system works, why Island View Terminal is considered a strategic national asset, and how recent regulatory decisions have placed it at the centre of a wider policy discussion involving government, industry, and transformation stakeholders.
South Africa’s fuel supply, including diesel, petrol, jet fuel, and lubricants is supported by a national network of coastal and inland petroleum depots.
Major coastal terminals are located at Island View Terminal in Durban, Richards Bay, Saldanha Bay near Cape Town, and Coega and Ngqura in the Eastern Cape. Inland depots include Heidelberg, Alrode, Langlaagte in Johannesburg South, and Waltloo in Pretoria. These inland facilities are mainly supplied through the Durban-to-Gauteng New Multi-Product Pipeline, known as the NMPP.
Each of South Africa’s 44 district municipalities and 6 metropolitan municipalities is supported by at least one petroleum depot.
The Department of Defence and its related entities have a legislated obligation to ensure uninterrupted access to strategic fuel stocks for national defence, disaster response, and regional peace-keeping operations. Recent geopolitical instability, maritime security threats in the Indian Ocean, and increasing dependency on imported refined fuels materially elevate IVT from a commercial port asset to a national defence logistics backbone.
At present, Defence access to IVT is indirect, discretionary, and dependent on commercial terminal operators. This exposes the State to unacceptable operational risk in the event of:
- Geopolitical supply disruptions.
- Labour instability.
- Commercial disputes.
- Infrastructure failures.
- Wartime or disaster mobilisation.
Defence and strategic fuel planners have formally indicated that dedicated, guaranteed throughput and berthing rights are a prerequisite for credible national fuel security: These cannot be provided under optional “future access mechanisms”.
Parliamentary legal advisors have cautioned that future access mechanisms such as uncommitted capacity, aggregators, and Expressions of Interest do not create real, bankable rights. These instruments:
- Are not registered in long-term lease schedules.
- Do not support project finance or balance-sheet funding.
- Can be suspended administratively.
- Are subordinate to Terminal Operator Agreements.
As such, they fail to meet the requirements for sustainable black industrial participation.
Concerns Raised by Economic Transformation Companies:
Economic transformation companies later raised concerns about the directive. They argue that existing BEE and BBBEE participation linked to the oil majors does not amount to meaningful economic transformation. They also contend that the current structure may have long-term implications for national fuel security.
Their concerns were submitted to several institutions, including the Department of Transport, the Office of the Public Protector, the Competition Commission under the DTIC, the KwaZulu-Natal Department of Transport, the City of eThekwini, NERSA, and Parliament’s Portfolio Committees on Transport and DTIC.
Parliamentary Engagement and Intervention:
Following these submissions, the Portfolio Committees on Transport and the DTIC initiated a mediation process between the affected parties. Three parliamentary sittings were held on 14 October, 25 October, and 28 November 2025.
During these engagements, the Minister reaffirmed her position in support of the Section 79 directive. The directive maintains the 25-year leases for the oil majors and outlines possible future access mechanisms, including third-party access, aggregator arrangements, uncommitted capacity, and Expressions of Interest.
These mechanisms would initially be coordinated by the Central Energy Fund, and later by Transnet and the Transnet National Ports Authority.
Outstanding Disputes:
Economic transformation companies, together with the Department of Defence, have stated that these future access measures do not sufficiently address their concerns.
Two Main Options are Proposed:
- The first is an amendment to the Section 79 directive to allocate at least 25 percent of IVT capacity to economic transformation entities and the Department of Defence.
- The second is a suspension of the current directive process to allow for a new competitive framework.
The Economic Transformation Companies have also raised concern about the Terminal Operator Agreements, known as TOAs, currently being prepared by the Transnet National Ports Authority on behalf of the oil majors. These agreements are scheduled for execution by 30 March 2026.
Terminal Operator Agreements (TOAs) Threats:
Once Terminal Operator Agreements (TOAs) are executed, they will create binding, multi-decade contractual rights protected under South African administrative and commercial law. Any post-signature attempt to restructure capacity allocation would require:
- Costly expropriation processes.
- Compensation.
- Protracted litigation.
- Treaty-level investor protection disputes.
This makes the TOA signing milestone of 30 March 2026 a point of no return for transformation and Defence access unless the Section 79 Directive is amended immediately.
Fiscal Exposure and Balance-Sheet Risk to the State:
Continued private control of IVT without structural state operational dominance transfers national fuel-security risk onto the sovereign balance sheet without corresponding control. In a disruption scenario, the State bears:
- Emergency procurement premiums.
- Strategic stock replenishment costs.
- Logistics substitution costs.
- Foreign exchange shocks.
- Yet it lacks guaranteed physical access to the underlying infrastructure.
This misalignment presents an unfunded contingent liability to National Treasury.
Current Status and Next Steps:
Economic transformation companies have acknowledged recent engagement efforts by the Minister and key stakeholders. However, they maintain that their request for a 25 percent allocation should be addressed in parallel with the implementation of the Section 79 directive, rather than at a later stage.
Based on IVT’s estimated national supply role of approximately 74% of South Africa’s fuel throughput, a 25% allocation would equate to roughly:
- 18–20% of national fuel security under transformation and Defence control.
- A minimum of 8–10 strategic cargo cycles per annum reserved for State and black-owned operators.
- This level of allocation is consistent with international strategic reserve norms and does not prejudice existing commercial operations.
They have also noted the role played by the Chairperson and Deputy Chairperson of the Portfolio Committees on Transport and the DTIC in coordinating the parliamentary process and have indicated that they await the outcome of this intervention.
At the same time, they continue to caution that the implementation of the current arrangements, without further amendment, may have long-term implications for both transformation objectives and national fuel security.
30 March 2026 – Irreversible Milestone;
The finalisation of the Terminal Operator Agreements (TOAs) on 30 March 2026 represents an irreversible legal milestone.
Once executed, these agreements will create protected operational rights under administrative, commercial and constitutional law. Any attempt to revise or restructure IVT capacity allocations after this date would require expropriation-level interventions, costly litigation, or compensation processes that expose the State to severe fiscal and legal risk.
This deadline therefore demands immediate and decisive action. If Parliament does not intervene before TOA execution, the State’s ability to reclaim operational control, secure Defence access, or correct structural transformation exclusions will be permanently constrained until at least 2051. This is the last practical window for constitutional correction, economic redress and national-security protection.
Concluding Remarks and Recommendations:
The Section 79 Directive, in its current form, constitutes a defining national policy choice that will determine control of South Africa’s fuel logistics backbone until at least 2051.
Parliament is therefore called upon to:
Formally instruct the Minister of Transport to amend the Section 79 Directive to include:
- A guaranteed minimum 25% allocation to economic transformation entities and Defence
Dedicated berthing and evacuation rights. - Suspend the conclusion of Terminal Operator Agreements until this amendment is legally incorporated.
- Mandate Transnet National Ports Authority to ring-fence Defence capacity as a national security installation.
Failure to act before the execution of TOAs will permanently constrain the State’s ability to correct structural exclusion and will entrench private dominance over a constitutionally strategic asset for another generation.
Recommendations:
Black industry players are concerned that the Section 79 directive renews long-term leases for existing oil majors without directly including black-owned operators, leaving transformation dependent on later processes and the discretion of incumbents or CEF. They argue that meaningful participation must be guaranteed within the directive itself, not through indirect or uncertain access, because the current approach risks entrenching existing dominance for another generation and fails to provide black operators with secure, long-term, legally recognised opportunities to invest, grow, and compete.
Economic-transformation companies worry that if no action is taken now, the Terminal Operator Agreements being finalised for signature by 30 March 2026 will lock in the current arrangements and make future changes nearly impossible. The Economic Transformation Companies argue that the proposed future-access measures do not address their exclusion and are calling either for an amendment to the Section 79 directive to guarantee at least 25% capacity for transformation entities and the Department of Defence, or for the Directive Process to be paused to allow a more inclusive framework.
Authored by: Zakhele Madela
Chairperson, Energy Producers and Traders Collective (EPTC) Association
Chairperson, Economic Intervention Forum South Africa (EIFSA) Org: www.eifsa.org.za