South Africa’s shrinking refining capacity cost the economy about R76 billion ($4.68 billion) in additional refined petroleum imports between 2021 and 2024, while the loss of domestic refinery activity also resulted in about 5,400 direct and indirect job losses, according to economists at the South African Reserve Bank.
The findings highlight the growing cost of South Africa’s dependence on imported fuel after refineries accounting for almost half of the country’s refining capacity closed from 2020.
The Reserve Bank economists said the country could have reduced its oil import bill by an average of 6.1 percent during the period if refined petroleum imports had remained at about 25 percent, the level recorded between 2010 and 2019.
‘Between 2021 and 2024, the oil import bill could have been R76bn lower if the cap to the import of refined petroleum products was at 25%,’ the economists said in notes published by the bank last week.
South Africa’s refining industry has come under pressure from ageing plants, high operating costs and prolonged regulatory uncertainty, which have discouraged new investment and reduced the country’s ability to process crude oil locally.
‘South Africa’s decline in refining capacity represents a structural shift in its energy and industrial sectors,’ the notes said.
The shift has left the economy more exposed to movements in international oil prices and disruptions to global shipping, while also increasing pressure on the trade balance and the rand.
‘At the macroeconomic level, greater dependence on imported refined products raises the oil import bill and increases exposure to global price volatility, with potential spillovers to the trade balance and exchange rate and indirectly to inflation under adverse conditions,’ the economists said.
The effect of that exposure was evident in the second quarter, when South Africa recorded a R205 billion trade deficit between April and June, largely driven by higher crude oil and refined petroleum imports as the war in the Middle East pushed up energy prices and raised concerns about supply.
A separate study by the Finland-based Centre for Research on Energy and Clean Air (Crea) estimated that South African fuel importers incurred at least R56 billion in additional costs between March and August following the surge in oil prices and disruption to shipping through the Strait of Hormuz.
Crea ranked South Africa among the 20 countries that paid the most from the price shock linked to the disruption.
The loss of domestic refining capacity has also affected supplies of bitumen, a key material used in road and airport construction.
Natref, South Africa’s only bitumen producer, halted production in September 2025, ending domestic refinery production of the material. The country has since risen to 20th globally among bitumen importers, from 123rd in 2019.
The development is significant for South Africa, where nearly all surfaced roads use bituminous materials.
The Central Energy Fund (CEF) is now seeking to rebuild the country’s refining capacity, with plans that would at least triple local crude processing.
The plan includes efforts to revive the Sapref refinery in KwaZulu-Natal, which has remained out of operation since floods in 2022 damaged the facility. The CEF is targeting throughput of about 400,000 barrels per day at Sapref.
The Reserve Bank said restoring domestic refining capacity would help reduce the country’s exposure to external shocks, although stronger fuel storage, logistics and supply-security systems would also be needed.
‘The shift towards refined-fuel imports has heightened South Africa’s vulnerability to external shocks,’ the economists said. ‘When global oil prices rise, the import bill increases more sharply than when crude oil was processed domestically, worsening the trade balance and the current account.’
The economists said the impact could also feed into inflation indirectly as pressure on the rand increases the domestic cost of imported goods.
The Reserve Bank notes are intended to stimulate discussion and are not formal policy statements. They were approved for publication by Konstantin Makrelov, the bank’s chief economist and a member of its Monetary Policy Committee.