How banks could help bring down petrol prices in South Africa
South African banks could help lower fuel prices by dropping or reducing transactional fees charged to station owners.
This is according to Wits Business School professor Jannie Rossouw, who told eNCA that petrol station owners owe banks around 40 cents per litre every time customers pay for fuel using their credit cards.
Rossouw explained that one cost often overlooked when discussing fuel prices is the fee filling station owners must pay to the financial services industry for credit card transactions.
According to Rossouw, the fee currently amounts to around 40 cents per litre on every petrol or diesel transaction.
“If we can convince the financial services industry to lower this fee, it would help to lower the fuel price in South Africa,” he said.
While 40 cents a litre is a relatively small amount, other experts noted that the National Treasury could also intervene.
Speaking in a separate interview, Parliament’s Energy Portfolio Committee Chair, Sahlulele Luzipo, said there are possible avenues for the Treasury to explore that can bring meaningful relief to consumers in South Africa.
Luzipo noted that, as an example, the Road Accident Fund (RAF) levy needs to be re-evaluated.
He explained that before the introduction of electric vehicles, the petrol price was the right avenue for such a levy.
However, those who can afford an electric car now unfairly bypass this levy but can still be in or cause an accident on the roads – suggesting the levy be removed from the petrol price and the funds be collected elsewhere.
Luzipo also noted this would lower the burden on essential sectors such as retail and farming, reducing the cost of things such as food.
Self-inflicted
Rossouw believes that while the banking industry can play a role in reducing fuel prices, the weakening of the rand is one of the major causes of the current high fuel prices, which is under the government’s control.
“The problem with the fuel price in South Africa is a weak rand and a high international oil price,” said the professor.
“Although the high international oil prices are not under South Africa’s control, the weak rand is under our control,” he added.
Therefore, the most practical way to strengthen the rand against major international currencies is by stimulating a growing economy through favourable government policies that attract foreign investment.
“Implementing such legislation will lower the rates we pay for oil as this is currently determined by the US dollar and, in turn, the prices motorists see at the pumps,” said Rossouw.
He also pointed out that reviving the country’s rundown railway system will greatly help decrease the dependence on diesel-fueled trucks to transport goods across the nine provinces.
This will have a positive ripple effect on the demand and cost of diesel as well as essential items like food, clothing, and medicine in South Africa.
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