Sunday Times

Fuel price tam­per­ing is a risky road to take

- Asha Speck­man

Arev­e­la­tion by an of­fi­cial in the depart­ment of en­ergy about Septem­ber’s fuel price re­prieve may de­bunk ru­mours that there was po­lit­i­cal pres­sure be­hind the in­ter­ven­tion. Then again, it’s hard to be­lieve that tech­nocrats would play with the sta­bil­ity of an in­dus­try.

Robert Maake, who heads the fuel pric­ing divi­sion at the depart­ment of en­ergy, dis­missed the no­tion of po­lit­i­cal in­flu­ence be­hind en­ergy min­is­ter Jeff Radebe’s re­prieve on the fuel price last month. He said it was tech­ni­cal staff who pro­posed the in­ter­ven­tion to Radebe fol­low­ing a pub­lic out­cry about the price hikes, which have been on a steep up­ward tra­jec­tory since April.

In Septem­ber, Radebe sup­pressed a fuel price hike, much to the sur­prise and re­lief of mo­torists.

The fuel in­dus­try re­luc­tantly ac­ceded to the move aimed at in­su­lat­ing con­sumers — al­beit for a month only — from yet an­other in­crease in petrol and diesel. But the in­dus­try ex­tracted a prom­ise from Radebe to not re­peat the in­ter­ven­tion, given its dis­rup­tion to the fuel pric­ing frame­work, which is al­ready com­plex.

Radebe’s ac­tion caused some pol­icy un­cer­tainty, ac­cord­ing to in­dus­try in­sid­ers, and some sus­pi­cion about his mo­tives.

Whether or not Radebe was act­ing un­der po­lit­i­cal pres­sure to im­prove the ANC’s im­age ahead of next year’s elec­tions is un­clear.

What is equally un­clear is how the state may sat­isfy a de­mand for an­other pos­si­ble in­ter­ven­tion in the fu­ture, given that the oil price is fore­cast to rise to as much as $100 (R1,467) a bar­rel by the end of this year.

The de­ci­sion not to hike the fuel price in Septem­ber by 30c and in­stead to in­crease it by only 5c had un­in­tended con­se­quences that left some in the in­dus­try out of pocket.

The LPG gas in­dus­try, for ex­am­ple, is ex­cluded from the slate levy fund from which many fuel providers can claim their costs in the event of an un­der-re­cov­ery.

Gas pro­duc­ers had to carry the cost when LPG gas was not hiked in Septem­ber in line with ris­ing oil prices.

How such a con­se­quence was over­looked by sup­pos­edly com­pe­tent tech­ni­cal staff is baf­fling, es­pe­cially as the in­ter­ven­tion was so tem­po­rary, and con­sumers this week had to stom­ach an­other hike, to a record fuel price.

The gov­ern­ment need only look at Brazil to un­der­stand the im­pli­ca­tions of open­ing the door to pop­ulist de­ci­sions in the fuel in­dus­try.

Af­ter a truck­ers’ strike over higher fuel prices nearly crip­pled Brazil’s econ­omy this year, the gov­ern­ment suc­cumbed, cut­ting more than 1-bil­lion real (R3.76bn) on so­cial pro­grammes, in­fra­struc­ture, ex­port in­cen­tives and even high­way main­te­nance to af­ford truck­ers’ de­mands for fuel prices to be cut.

As much as all com­muters want lower fuel prices, in SA the gov­ern­ment must care­fully con­sider its moves be­cause rash de­ci­sions, no mat­ter how pop­u­lar with vot­ers, could desta­bilise crit­i­cal in­dus­tries and have a se­vere im­pact on the econ­omy.

Rash de­ci­sions, no mat­ter how pop­u­lar, could desta­bilise crit­i­cal in­dus­tries

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