Regulatory uncertainty and transport biofuels investments in South Africa

Abstract

This paper investigates the impact of regulatory uncertainty on the development of the South African transport biofuels industry. A qualitative research methodology was used to study investor behavior in response to conditions of continued regulatory uncertainty. The sample included key members of the South African transport biofuels value chain, including; major oil companies, biofuels manufacturers and the applicable government agencies. The collected field data was analysed against literature on investments under conditions of uncertainty, the South African petroleum products pricing principles and global best practices in the transport biofuels sector. Amongst others, the results revealed that continued regulatory uncertainty impacts investor confidence negatively, delays investments and where investors have considerable market power, they do not conform to institutional pressure.