Warning about extra petrol and diesel charges in South Africa
Trade union Solidarity has urged fuel companies to immediately halt what it calls “excessive overhead charges” on petrol and diesel in South Africa.
According to the union, fuel companies are adding up to R3 per litre to diesel and R1 per litre to petrol, impacting service stations and transporters in the country.
Fuel companies are suffering heavily from the oil market chaos caused by the United States’ war in Iran, which played out in March and early April, leading to record fuel price hikes this month.
Under-recoveries for petrol and diesel at the end of March hit R7/litre and R10/litre, respectively, which would have been pushed through to consumers through price hikes from 1 April.
However, this was reduced to R3/litre and R7/litre through government intervention, where the National Treasury cut the general fuel levy by R3/litre for the month.
Despite the relief and the shaky ceasefire announced this week, fuel price recoveries are still heavily in the red in April, pointing to another big fuel price hike on the cards for May.
The latest snapshot from the Central Energy Fund (CEF) shows an under-recovery of R4/litre for petrol and R11.50/litre for diesel.
This is a significant pull-back from the R8/litre and R17/litre under-recovery at the start of the month, but still far from prices moving towards a cut.
As a result, fuel companies are struggling to cover their daily losses, prompting measures such as the surcharge.
However, Theuns du Buisson, an economic researcher at the Solidarity Research Institute (SRI), said that even though surcharges are not being levied on pump prices, it is misleading to claim they will have no impact on end consumers.
Du Buisson warned that transport contractors and service stations, already struggling under market pressures, will not be able to absorb the costs, which will inevitably be passed on to consumers.
“Transport contractors have no choice but to pay these prices, and these costs are ultimately passed on to the consumer,” he said.
Service station owners cannot absorb the costs of the surcharges being added, which means that consumers will inevitably pay more for diesel, he added.
“In the case of petrol, where prices are more tightly regulated, this places filling stations in an impossible position,” he said, as they cannot change the regulated prices charged to consumers.
Threat of investigations
Solidarity also flagged an irony: the fuel companies that are now finding loopholes to get around regulated pricing previously opposed attempts to deregulate fuel prices.
Fuel prices are tightly regulated in South Africa, but at the retail level (ie, at the pumps), only petrol is strictly controlled.
The wholesale price of diesel is subject to similar restrictions, but retail prices are unregulated, with service stations setting their own margins and prices determined by the market.
The union said that fuel companies and stations must be held accountable for operating within existing regulations and not manipulating the system to the detriment of consumers.
Solidarity said it would continue to apply pressure on companies that are pushing surcharges until “unfair practices are ended.”
Petrol stations, transport operators, suppliers, and other businesses will also be under close scrutiny by state authorities over their pricing practices.
The Competition Commission warned this week that any attempts to exploit the oil crisis by significantly raising prices will not be tolerated.
The commission said it will look into two forms of potential fuel price gouging.
The first is “jumping the gun,” where a business raises prices before it has actually experienced a higher cost itself.
The second is where a business raises prices by far more than the increase in its own costs.
The commission warned that the impact of rising prices is not only felt at the pumps, but all along the supply chain, and any untoward hikes could ripple throughout the economy.
It added that it would also be looking at what happens when prices start to come down, and whether businesses move to lower prices as quickly as they raised them.
Loading ...