Retailer wants review of SA fuel-pricing regulations

Retail group Pick n Pay has called on government to revisit the current restrictive pricing structures that govern the price of fuel in South Africa as a matter of urgency.

This comes after it was announced by the Department of Minerals and Energy last Friday that the retail price of all grades of petrol would increase by 17 cents per litre on Wednesday February 6 – a fresh record high.

The wholesale price of diesel and 0.005% sulphur will increase by seven cents a litre.

The wholesale price of illuminating paraffin will increase by two cents a litre, while the single maximum national retail price for illuminating paraffin will also increase by two cents a litre.

The retail price of a litre of 95 octane unleaded petrol in Gauteng increases to 764c/l and to 740c/l at the coast.

"Global oil prices have reached a record high and South African consumers – already very hard-pressed with interest rate increases and growing inflation – are facing the brunt of these price hikes. The irony is that this isn't altogether necessary," said Pick n Pay chairman Raymond Ackerman.

He said that a year ago, a Task Team appointed by South African Finance Minister to look into the merits of imposing a tax on super profits earned by companies in the synthetic fuels industry had recommended the easing of regulation in the fuel retail market.

"Unfortunately, as before, nothing appears to have happened," said Ackerman.

He added that Pick n Pay's view on petrol and its burdensome, anti-consumer pricing structure is long held and hardly news to many.

"Petrol remains the only commodity to enjoy state-controlled pricing today, with all other mandated prices and Boards of Control already done away with, which is entirely appropriate," he said.

"Our stance on price fixing and monopolies is born of a fundamental belief in the free market, and the benefits for consumers that accrue from vigorous competition. This is particularly the case in a developing economy, where growth is at the top of the agenda, particularly now," he added.

Ackerman explained that quite simply put, price fixing is not good for the consumer, and added that the question remains "why it is that petrol is still so heavily regulated".

"The argument up until the early 1990s was that fuel was a strategic commodity and therefore had to be the subject of heavy regulation to guarantee supply in a siege economy. That's hardly the case today and there remain very few arguments which hold any water whatsoever," said Ackerman.

He added that when South Africa's new democracy came into being, there was much welcomed intent of market liberalization and deregulation within industry, and this to a substantive degree has happened, with all due credit to the South African Government.

"I think it's safe to say that the Competition Tribunal hearings held a few years ago on a proposed oil industry merger caused a great deal of embarrassing information to enter the public domain about the industry and how it operates. Issues such as the outdated and now almost ridiculous MPAR system became a matter of detailed public record," he said.

"Any deregulation of a basic commodity is always great for consumers, who buy fuel as regularly as groceries. Ultimately, what's good for consumers is good for South Africa. This is in government's hands and it is totally within their power to fix," concluded Ackerman.

Article via I-Net-Bridge