Johannesburg - Clarity on South Africa's future fuel standards could be available to local automotive and petroleum industry players as early as January.
The decision on fuel standards will determine major investment in South Africa's petrol refineries, as well as the engine technology used in South African cars.
The country's fuel manufacturers, including Sasol, PetroSA, Engen, Shell, BP, Total as well as Chevron - represented by the South African Petroleum Industry Association (Sapia) - are under pressure from the automotive industry to start producing more eco-friendly petrol.
Sapia's environmental adviser Anton Moldan told Fin24.com the body is in talks with government and the automotive industry, and a decision on fuel standards could be reached as early as January 2010.
South African fuel is of the Euro II emission standards. Other developing countries using Euro II are India and Thailand. However, both are moving to the more advanced Euro III standard in 2010.
Brazil, China, Argentina and South Korea are using Euro IV and will shifting to Euro V by 2012 and 2013. Europe is currently using Euro V fuel, with a view to moving to Euro VI in the future.
Lack of clarity from government
European emission standards relate to the amount of exhaust emission from cars and aim to limit pollutant chemicals such as nitrogen oxide and carbon monoxide.
The fact that South African fuel quality lags behind international standards means there is an impediment to building newer generation engines in South Africa.
"The main implication for consumers is that they are driving in cars which are not as fuel efficient," said Nico Vermeulen, director at the National Association of Automotive Manufacturers SA.
Vermeulen added that occasionally new generation engines are imported into South Africa. However, operational problems can arise when these engines are used with South Africa's lower quality fuel.
However, Sapia said local refineries have stalled the process of upgrading their facilities because they have not received clear direction from government on what South Africa's future fuel standards will be.
"The oil companies will need to invest about R40bn in refineries and the process will take around five years," said Moldan.
"We can't do this without regulatory certainty," he said.