Illicit diesel-paraffin blending could affect up to 800 million litres a year - IOL

Illegal blending of diesel with illuminating paraffin could account for up to 7% of South Africa’s diesel market, industry research suggests.

Diesel illegally blended with illuminating paraffin could account for as much as 7% of South Africa’s diesel market, or up to 800 million litres a year, according to new industry research cited by the Fuels Industry Association of South Africa (FIASA).

FIASA said recent industry research had provided, for the first time, a credible indication of the likely national scale of diesel adulteration, estimating that it accounted for between 5% and 7% of the market.

That translates to about 595 million to 800 million litres annually, with FIASA estimating the illicit market to be worth R15.3 billion and associated tax losses at between R3.6bn and R4.2bn a year.

FIASA described diesel adulteration as “one of the most significant illicit trade challenges facing the South African fuels industry”.

The warning comes as diesel prices are expected to rise sharply in October. The latest Central Energy Fund data indicated potential increases of about R2.73 a litre for 500ppm diesel and R3.13 for 50ppm.

FIASA said higher legitimate diesel prices could strengthen the illicit trade by making heavily discounted fuel more attractive to customers.

It said the different tax treatment of diesel and illuminating paraffin created an estimated R6.03-a-litre gap that illegal operators could exploit.

“Research indicates that illegal blenders can discount adulterated diesel by as much as approximately R3.02 per litre before reaching break-even point,” it said.

FIASA cautioned that price alone did not prove adulteration, but said diesel consistently offered R2 to R3 a litre below comparable market prices without a credible explanation should raise concern.

FIASA said reported illuminating paraffin sales rose from about 620 million litres in 2019 to 1.4 billion litres in 2023 before easing to about 1.195 billion litres in 2024. It said sales also moderated when the tax gap with diesel temporarily narrowed, falling from 21% to 27% above historical levels between January and March to 8% to 13% above historical levels between April and June.

While not proof of adulteration, FIASA said the pattern was consistent with some demand being driven by the financial incentive to blend paraffin into diesel.

The problem had already surfaced in government testing. In 2024, Department of Mineral Resources and Energy Deputy Director-General Tseliso Maqubela said 70 of 1 070 fuel samples taken from service stations across the country had failed compliance after the A1 marker used in illuminating paraffin was detected.

SARS said in June 2025 that it had detected a national trend involving storage and distribution depots illegally mixing diesel with paraffin. Samples collected during some investigations contained paraffin concentrations of up to 68%.

A joint intelligence team identified 23 targets across Gauteng, Mpumalanga and KwaZulu-Natal. SARS said 953 515 litres of contaminated diesel were detained, while six fuel depots were found to be in contravention of customs law. Assets and contaminated fuel valued at more than R367 million were also detained, and 13 criminal cases were registered with police.

SARS said in response to questions that it remained vigilant to fuel-sector non-compliance but would not disclose operational details that could compromise investigations.

Road Freight Association chief executive Gavin Kelly said dozens of hauliers among the association’s members had reported contaminated-fuel incidents, sometimes discovering the problem only after serious mechanical failures.

“Operators face repair costs running into hundreds of thousands of rands per vehicle, alongside substantial downtime and potential contract penalties when deliveries are missed,” Kelly said.

He said regulatory findings and industry reports pointed to North West, Mpumalanga and Limpopo as particular areas of concern, with reports also growing in Gauteng and KwaZulu-Natal, including along the N3.

WearCheck diagnostician Rivendren Wayne Moodley said one of the dangers was that vehicles could continue running while damage developed gradually.

“The fact that an engine continues to run should therefore never be regarded as proof that the fuel is safe,” Moodley said.

Paraffin reduces diesel’s lubricity and can accelerate wear in high-pressure pumps and injectors. Warning signs can include increased fuel consumption, reduced power, rough running, excessive smoke and fuel-system faults.

Moodley said adulterated diesel could look and smell normal, meaning laboratory testing was often needed to establish whether fuel was responsible for mechanical problems.

FIASA advised motorists and businesses to buy from reputable suppliers and be wary of sellers unable to provide verifiable licences, quality certificates, source documentation and delivery records.

It called for tighter monitoring of paraffin through the supply chain, increased fuel testing at depots and distribution points and sustained enforcement involving SARS, police and petroleum regulators.

Mineral and Petroleum Resources Minister Gwede Mantashe recently described illegal diesel-paraffin blending as criminal activity that “undermines the rule of law, distorts markets, damages equipment, compromises consumer confidence, and poses significant risks to our economy and national security”.

The Department of Mineral and Petroleum Resources did not respond to a separate request for comment.