SA moves to ease con­trols on fuel price

Pro­pos­als in dis­cus­sion doc­u­ment would al­low ser­vice sta­tions to set their own prices for 93 oc­tane petrol

The Mercury - - FRONT PAGE - ROY COKAYNE [email protected]

THE POS­SI­BLE par­tial dereg­u­la­tion of South Africa’s fuel price ap­pears to have moved a step closer.

The Depart­ment of En­ergy yes­ter­day re­leased a dis­cus­sion doc­u­ment on the re­view of the ba­sic fuel price (BFP) struc­ture for petrol, diesel and il­lu­mi­nat­ing paraf­fin for pub­lic com­ment.

Al­though the doc­u­ment is highly tech­ni­cal and does not men­tion the dereg­u­la­tion of the fuel price, Busi­ness Re­port is aware of an­other dis­cus­sion doc­u­ment that was sent to the South African Pe­tro­leum In­dus­try As­so­ci­a­tion (Sapia) about the pos­si­ble in­tro­duc­tion of a max­i­mum price for 93 oc­tane fuel.

This would in­tro­duce com­pe­ti­tion into the fuel re­tail­ing sec­tor and al­low the dif­fer­ent ser­vice sta­tions to set their own price, as is cur­rently the case with the diesel price.

It would also pro­vide a boost to Sa­sol, which was the only pro­ducer of 93 oc­tane fuel in the coun­try.

Avhap­fani Tshi­fu­laro, the ex­ec­u­tive di­rec­tor of Sapia, said yes­ter­day there was no con­sen­sus among the oil com­pa­nies about the pos­si­ble dereg­u­la­tion of the price of 93 oc­tane petrol, adding there were those that were sup­port­ive and those that felt fur­ther work was needed on the pro­posal.

Tshi­fu­laro said Sapia was for­mu­lat­ing in­dus­try com­ment on the BFP re­view dis­cus­sion doc­u­ment, and this process was likely to be com­pleted by mid-Jan­uary.

But Tshi­fu­laro


the BFP

for­mula was in­tro­duced in 2003, and a re­view of some of the el­e­ments, to see whether they were still ad­dress­ing what was in­tended when it was im­ple­mented, was long over­due.

The Na­tional As­so­ci­a­tion of Au­to­mo­bile Man­u­fac­tur­ers of South Africa (Naamsa) is also in pos­ses­sion of the 93 oc­tane dis­cus­sion doc­u­ment.

Nico Ver­meulen, the di­rec­tor of Naamsa, said the as­so­ci­a­tion sub­scribed to the prin­ci­ples of free en­ter­prise and sup­ported in­creased com­pe­ti­tion and dereg­u­la­tion of fuel prices, while ac­cept­ing that the re­ten­tion of the ban on self ser­vice would re­main in place to pro­tect the 90 000-plus jobs in the fuel re­tail sec­tor.

The dis­cus­sion doc­u­ment on the re­view of the BFP said the price was based on the im­port par­ity pric­ing for­mula.

But it said the to­tal amount of im­ported prod­ucts ver­sus the to­tal prod­ucts man­u­fac­tured was not fac­tored into the pric­ing for­mula to de­ter­mine the prices in South Africa, be­cause the BFP was a deemed pric­ing mech­a­nism that as­sumed there were no re­finer­ies in South Africa.

In re­al­ity, there were four re­finer­ies and two syn­thetic fuel re­finer­ies in the coun­try that pro­duced 80 per­cent of the pe­tro­leum prod­ucts to meet lo­cal de­mand, with the 20 per­cent bal­ance met through im­por­ta­tion, it said.

The dis­cus­sion doc­u­ment con­cluded that the im­port-par­ity pric­ing prin­ci­ple should be main­tained for im­ported pe­tro­leum prod­ucts, but the BFP should be “un-deemed to re­flect the ac­tual cost of land­ing prod­ucts at South African ports”.

Changes are also pro­posed to sev­eral cost in­puts used to in­form the BFP for­mula, in­clud­ing the free-on-board value of prod­ucts in se­lected ref­er­ence mar­kets; freight costs; in­sur­ance; ocean leak­age and evap­o­ra­tion; cargo dues; de­mur­rage; stock­hold­ing costs; and fi­nanc­ing costs.

The dead­line for the sub­mis­sion of com­ments on the dis­cus­sion doc­u­ment is Jan­uary 31, 2019.

The depart­ment said it was en­vis­aged that the re­vised BFP for­mula would be im­ple­mented next year af­ter con­sul­ta­tion with all stake­hold­ers.

THE SA Pe­tro­leum In­dus­try As­so­ci­a­tion says there is no con­sen­sus among oil com­pa­nies about the pos­si­ble dereg­u­la­tion of the price of 93 oc­tane.

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