Bad news for petrol price cap in South Africa
The proposed introduction of a petrol price cap in South Africa is now effectively dead in the water after significant pushback from the oil companies and fuel retailers, says Robert Maake, director of fuel pricing mechanism at the Department of Energy.
Speaking to radio station 702, Maake said that as many as 84% of stakeholders said they were not in favour of the proposal, and that it would not work as intended. The proposed idea was to update the price cap monthly, with retailers still able to sell below the minimum price if they wanted.
Maake confirmed that the government is now considering alternative mechanisms to help reduce the impact of South Africa’s record high petrol prices.
“As far as I know, the discussion is being led now by the Ministry of Finance. I know that they are actually trying to schedule meetings to actually start the discussions after the minister announced that there will be a review of the fuel pricing structure, but at the moment we haven’t had any formal engagement with the Department of the National Treasury.”
Finance minister Enoch Godongwana and energy minister Gwede Mantashe both confirmed in December 2021 that the government is looking at options to lower the cost of fuel to consumers.
Review needed
The Automobile Association of South Africa has launched a petition calling for a complete review of the country’s petrol price and how it is calculated.
A comprehensive, long-term analysis of the components of the fuel price needs to be done as a matter of urgency, and all calculations relating to the fuel price should be audited to determine if they are still relevant and appropriate to South African conditions, it said.
“The General Fuel and Road Accident Fund levies contribute significantly every litre of fuel sold, but citizens don’t see tangible benefits from these taxes.
“However, several questions relating to the allocation and utilisation of these funds are raised. For instance, the country continues to fund the Road Accident Fund through fuel taxes but it is poorly managed, and a drain on the country’s resources.
“Apart from poor management, the issue of whether the country has fully explored alternatives to compensate victims of crashes, and, critically, has the private sector been consulted for their inputs?”
The AA said private sector involvement in dealing with rising fuel costs has now become inevitable, and it remains committed to working with the government in the interest of consumers.
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