Com­pe­ti­tion in fuel mar­ket mooted

Max­i­mum tar­iff for 93 oc­tane would pro­vide re­lief to squeezed con­sumers and shift driv­ers away from 95

Business Day - - FRONT PAGE - Carol Pa­ton Writer at Large

The gov­ern­ment is hop­ing a plan to al­low some com­pe­ti­tion into set­ting the price of 93 oc­tane fuel will re­sult in lower prices and shift higher num­bers of con­sumers into us­ing it rather than high­e­roc­tane 95.

The gov­ern­ment is hop­ing a plan to al­low some com­pe­ti­tion into set­ting the price of 93 oc­tane fuel will re­sult in lower prices and shift higher num­bers of con­sumers into us­ing it rather than higher-oc­tane 95.

The pro­posal has been cir­cu­lated to the fuel whole­sale and re­tail in­dus­tries, which have been asked to com­ment on it by Wed­nes­day.

It is ten­ta­tive at this point and best de­scribed as a “mar­ket sound­ing” ex­er­cise, said gov­ern­ment of­fi­cials.

The move comes as the coun­try faces record high fuel prices due to a ris­ing oil price and weak rand, with the price of 95 oc­tane in Gaut­eng at R17.08 and 93 at R16.85. With the ex­cep­tion of diesel, fuel prices are reg­u­lated at the pump and ad­justed each month.

But po­lit­i­cal pres­sure has been mount­ing on the gov­ern­ment to pro­vide some re­lief as only about half of the price is com­prised of the ba­sic fuel cost and the rest is made of levies and other charges.

Deputy direc­tor-gen­eral in the depart­ment of en­ergy Tseliso Maqubela said the sug­ges­tion was that when an­nounc­ing the monthly fuel price, the gov­ern­ment would set a max­i­mum price for 93, above which re­tail­ers could not go. The price for 95 oc­tane would re­main at a manda­tory level.

“The price that we pub­lish ev­ery month for 93 will not be a set price but a capped price. What we think will hap­pen is that whole­salers will dis­count 93, which will al­low re­tail­ers to af­ford to pass this on to con­sumers,” he said.

Petrol in 93 oc­tane re­quires less re­fin­ing than 95 and is cheaper to re­fine.

But only 20% of driv­ers on SA roads use 93 oc­tane, in the be­lief that 95 pro­vides bet­ter per­for­mance. As 95 has higher oc­tanes, it is less likely to preignite and dam­age en­gines.

Maqubela said while this was true for coastal ar­eas it was not true for the higher al­ti­tudes in in­land prov­inces.

Ac­cord­ing to man­u­fac­turer spec­i­fi­ca­tions, about half the cars on the coun­try’s roads are able to use 93.

Maqubela said a greater num­ber of users of 93 would pro­mote more re­fin­ing of the prod­uct, and this would hope­fully bring down the price.

Ad­di­tion­ally, the im­por­ta­tion of the var­i­ous com­po­nents that are used to en­hance oc­tane would no longer be needed, which would im­prove the coun­try’s trade balance.

In­dus­try play­ers said they could not com­ment on the pro­posal un­til they had con­sulted with their mem­bers.

The Au­to­mo­bile As­so­ci­a­tion said it was in favour of ex­plor­ing any op­tion that could lower prices for con­sumers.

THE PRICE THAT WE PUB­LISH EV­ERY MONTH FOR 93 WILL NOT BE A SET PRICE BUT A CAPPED PRICE

/Sino Ma­jangaza/Daily Dis­patch

Fuel plan: Con­sumers could find some re­lief at the petrol pumps if the gov­ern­ment’s pro­posal to cap the price of 93 oc­tane goes ahead.

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