Liquid Fuels

Transformation in liquid fuels sector is a sustainability issue

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Despite much work by the industry and government, and the signing of the first industry charter in 2000, the liquid fuels sector has still not achieved significant transformation. Noor Kapdi, Managing Partner, Dentons South Africa, argues that what the industry needs is a focus on the underlying reasons for transformation, rather than simply treating it as a compliance issue.

“The Moloto Report of 2011 showed why companies are not complying with the charter, and the Department of Energy is working with stakeholders to align the charter with the BEE Codes. This is important and needs to be done, but a compliance mindset will never deliver genuine transformation,” Mr Kapdi says. “It’s the same challenge we see when it comes to governance and the King Codes. Only when the industry accepts that genuine transformation is its passport to a successful future, will we see progress.”

Mr Kapdi says that industry players must not forget the political and moral imperatives behind transformation: the normalisation of the industry after apartheid, and the need to fast-track the incorporation of black interests into the sector. The redress of past injustice is one important driver of transformation but, as important, only a transformed industry will have the “social licence to operate” in a democratic South Africa.

“An industry that is not seen to be fully representative of the country’s demographics, and contributing to building the economic future of all citizens, will simply lose the support of society as a whole. When the social licence to operate is forfeited, the legal licence will soon follow,” he says. “Transformation, above all, is an issue of sustainability and, as such, boards, executive management, shareholders and employees should all be driving it with great vigour.”

Mr Kapdi has co-authored a guide to, and overview of, the legislative framework of the liquid fuels industry. He says that the guide builds on Dentons’ long involvement in the sector, and was born out of the realisation that the transformation journey has to be carefully managed in order to support the development of a profitable and robust industry.

“Too often, transformation is seen as an additional burden but, in line with the thinking behind the Sullivan Principles, companies need to see why it is crucial to their futures, and the future of the industry, to get it right,” Mr Kapdi concludes. “Once the industry players see this, we can start to develop transformation solutions together, and build a culture of mutual support and cooperation, as the Moloto Report suggested. This is an industry with lots of potential—we must not waste it.”

Editor's note: The guide is available on request from 

Photo caption: Noor Kapdi, Managing Partner at law firm Dentons South Africa, says transformation is an issue of sustainability and, as such, boards, executive management, shareholders and employees should all be driving it with great vigour.

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