CEOs from South Africa’s biggest retailers slam government’s ‘half-job’ load shedding relief

The CEOs of South Africa’s three largest food and grocery retailers are disappointed that the government has not extended the diesel fuel levy refund to food retailers.

Pick n Pay’s Pieter Boone, Spar’s Mike Bosman, and Shoprite Checkers Pieter Engelbrecht have all chimed in on the national budget.

During the finance minister’s national budget speech yesterday (22 February), he announced diesel-related price relief for food manufacturers.

“To ease the impact of the electricity crisis on food prices, the refund on the Road Accident Fund levy for diesel used in the manufacturing process, such as for generators, will be extended to manufacturers of foodstuffs. This takes effect from 1 April 2023 for two years,” the minister said.

Food retailers, however, are upset over this decision as they are stuck spending billions of rands on diesel each month to supply their freight vehicles and generators.

“It is costing us billions of Rands in diesel to fuel our emergency generators,” they said.

“The government has accepted the logic that the food industry should not be penalised for the energy crisis but has only done half the job. Our supermarkets are on the front line in keeping the lights on, and the shelves and chillers stacked, for customers during load shedding.”

Despite trying to absorb as much as possible of the cost associated with keeping the lights and fridges on – the companies said they cannot hold off passing the costs to the public indefinitely.

The CEOs have called for cooperation from the government

“We urgently ask the government to look again and extend the refund to retailers,” they said.

On 8 February, retail group Pick n Pay announced that load shedding has been having a profound impact on its business practices – racking up a bill of R60 million a month to run diesel generators.

It further added that on top of load shedding, knock-on effects regarding maintenance costs, generator repair costs and expenses relating to food waste are hampering the company.

The group said that the current energy crisis is a new permanent reality for the retail sector, and immediate interventions are being planned, including solar installation, reducing energy consumption and more.

Over the 2022 period, the group said it had spent an additional R346 million year-on-year to run diesel generators for the first 10 months.

Meanwhile, in an operational update on its business for the six months ending 1 January 2023, Shoprite reported spending R560 million of fuel for its generators – roughly R90 million a month.

Property developer Attacq revealed in December that it costs retailers over R500,000 a day on average to keep operations going during stage 6 load shedding, while pharmacy and healthcare retailer Dis-Chem noted that, due to load shedding over the six months, diesel costs across its stores had increased by 54% to R36 million.

Read: Budget 2023 review: A balancing act with red flags in each hand