Government hands tide on fuel pricing deregulation

PARLIAMENT’S Portfolio Committee on Mineral Resources and Energy met yesterday to deliberate on the presentations by different stakeholders relating to the basic fuel price (BFP) and the state of refining in South Africa.

On April 14, the Department of Minerals and Energy stated that the government cannot deregulate the fuel price because the country’s market was not ready for deregulation.

According to the department’s director of fuel pricing mechanism, Robert Maake, various factors need to be considered before the market will be ready for deregulation. He also indicated that fuel prices are lower in countries like Botswana and Lesotho because they bought from South Africa at a BFP which doesn’t include local factors.

The AA proposed recommendations to mitigate rising fuel costs. The association’s chief executive, Willem Groenewald said providing cheaper fuels to South African citizens will not happen with the flick of switch but will require a multi-faceted, multi-departmental approach.

Among the recommendations is an investigation of current pricing model, recalculation and audit of existing elements within the pricing model, better management and governance of the Road Accident Fund, better allocation and utilisation of funds from the General Fuel Levy and investment in alternatives to the country’s current reliance on fuel.

Committee secretary Arico Kotze said the department should also urgently engage with freight companies to resolve the removal of the 15% premium on freight.

Kotze said interventions on the possible closure of a number of refineries are required.

More interventions to be looked at include ensuring maximum stocking of fuel products when costs are at its lowest in order to enhance reserves.