Capping 93 price ‘could see loss of jobs’

Petrol. File picture
Petrol. File picture
Image: Gallo Images/Thinkstock

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 wafer thin 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. -BusinessLIVE