Cap­ping 93 price ‘could see loss of jobs’

Weekend Post (South Africa) - - News - Lisa Steyn

The Fuel Retailers As­so­ci­a­tion‚ rep­re­sent­ing more than 2‚500 fuel retailers‚ has hit back at the gov­ern­ment’s pro­posal to cap the price of 93 oc­tane petrol‚ claim­ing it will cut into wafer­thin profit mar­gins and ac­cel­er­ate job losses in the sec­tor.

In a bid to ease the pres­sure that high petrol prices are putting on con­sumers‚ the depart­ment of en­ergy has pro­posed cap­ping the price of 93 oc­tane petrol. It says that by set­ting a max­i­mum price‚ in­stead of reg­u­lat­ing the ex­act price at the pump‚ it will en­cour­age retailers to com­pete in pric­ing‚ as is the case with diesel.

A big­ger price dif­fer­ence would also en­cour­age in­land fuel con­sumers who are un­nec­es­sar­ily fill­ing up with 95 un­leaded petrol to switch to 93. That would ease pres­sure to im­port 95 un­leaded petrol to meet de­mand and have a pos­i­tive ef­fect on the trade bal­ance‚ said the depart­ment.

But Reg­gie Sibiya‚ CEO of the as­so­ci­a­tion‚ said the depart­ment was wrong to ex­pect retailers to give away what lit­tle prof­its they made.

Ac­cord­ing to Sibiya‚ at the cur­rent reg­u­lated pump price of R16.85 per litre for 93 oc­tane un­leaded petrol‚ af­ter ex­penses the re­tailer makes a profit of just 14.3c/litre – ac­count­ing for just 0.8% of what the cus­tomer pays at the pump.

“Ev­ery time the depart­ment seeks so­lu­tions‚ the tar­get is al­ways the path of least re­sis­tance – small busi­nesses. They seem to shy away from at­tack­ing the gi­ants – the oil com­pa­nies – or look­ing at their own con­tri­bu­tion [in terms of taxes and levies] to the fuel price struc­ture‚” he said.

The pro­posal would also ac­cel­er­ate job losses in the sec­tor‚ said Sibiya.

“If ev­ery ser­vice sta­tion re­duced their staff by four each at 5‚000 ser­vice sta­tions‚ we are look­ing at 20‚000 job losses.”

Peter Mor­gan‚ CEO of the Liq­uid Fu­els Whole­salers As­so­ci­a­tion that rep­re­sents 46 in­de­pen­dent fuel whole­salers‚ said his as­so­ci­a­tion was con­cerned about the un­in­tended con­se­quences of the pro­posal and that it would hurt trans­for­ma­tion in the sec­tor.

The tar­get is al­ways the path of least re­sis­tance – small busi­nesses

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