BP prepares to pump millions into South Africa amid new regulations on cleaner diesel

BP will pour $1bn (£776m) into South Africa over the next five years as it tries to meet new rules on cleaner diesel, the company said earlier today.

The money will include around $250m to refit the country’s largest refinery, Sapref, in Durban on the country's eastern coast.

The oil business will pump between 3.5bn and 4bn rand into the refinery to start producing low sulphur diesel, BP Southern Africa’s chief executive Priscillah Mabelane said.

The plant, which will close for work during May and June next year, will be upgraded to meet new rules to reduce the levels of sulphur in fuel and customer demand for cleaner diesel, the chief executive said.

South African ministers have been in talks with BP and other operators such as Total and Sasol on how to recover an estimated $4bn in upgrade costs to meet the new requirements.

“From an industry perspective we are pushing very hard to ensure that there is policy clarity because we have been on this journey very long, almost a decade,” Mabelane said.

Mabelane was speaking at an event to launch a new loyalty card, a partnership with Pick n Pay, the second largest retailer in South Africa.

The scheme is part of BP’s vigorous expansion plan, as the company prepares to throw $400m at its South African retail business.

“We are aggressively going to grow our footprint in the country,” Mabelane said.

It is also looking further afield and has started eyeing expansion into neighbouring Mozambique, Mabelane said.

The news came on the same day as the South African central bank lowered its economic forecasts and raised interest rates to 6.75 per cent, sending the rand up to $0.07.