More plans to deregulate petrol pricing in SA

The petrol price decrease was welcomed by motorists and economists alike and the government is taking further steps to ease the financial prices. 

It was announced last week by the National Treasury and the Department of Mineral Resources and Energy (DMRE) a two-phase plan to provide some relief on petrol pumps.

Phase one includes a temporary reduction in the general fuel levy of R1.50 from Wednesday, 6 April 2022 to Tuesday 31 May 2022.

The further deregulation steps could allow retailers to compete on price and offer motorists discounts and special offers to fill up at their stations, the Sunday Times reported.

The price of fuel will not be determined by the government after it takes the first step in this direction in June.

Speaking to the Sunday Times, Finance Minister Enoch Godongwana said this is one of the actions to freer up the market.

The deregulation will only occur once Treasury figures out how to recover the R90 billion loss from the fiscus it would be if fuel taxes are removed in one go.

Godongwana said there are many options on the table to achieve this such as additional taxes on motor licence renewal fees to fund the Road Accident Fund, which relies on funding through a fuel levy.

The government will have to figure out a way of removing taxes and other administered prices from fuel, that will make it attractive for competition and drastically lower the price consumers pay.

ALSO READ: Parliament backs move to scrap RAF from the fuel levy

Outa CEO Wayne Duvenage welcomed the plans to deregulate, however, was not convinced the price of petrol will be less expensive. 

 “It is not going to be cheap because of the margins. There is not much for retailers to play with. Some retailers might discount it but what you don’t want is manipulation by a few of the bigger players who push prices too high. However, the deregulation will create a little bit of competition,” Duvenage told the publication.

Phase two to ease petrol price

Phase two of the relief measures will be introduced after the expiry of the temporary measures from Wednesday 1 June 2022, these include:

•  Reduction in the Basic Fuel Price of 3c/l, in line with the recommendations of the review done by the DMRE.
• The termination of the Demand Side Management Levy (DSML) of 10c/l on 95 unleaded petrol sold inland.
• The introduction of a price cap on 93 octane petrol, this will allow retailers to sell at a price below the regulated price.
• The termination of the practice to publish guidance by the DMRE on diesel prices to promote greater competition.
• The Regulatory Accounting System (including the retail margin, wholesale margin and secondary storage and distribution margins) will be reviewed to assess whether adjustments can be made to lower the margins over the medium term.
• Interventions will be considered by the DMRE to reduce the price pressure for illuminating paraffin over the medium term.

Complied by Sandisiwe Mbhele, additional reporting by Narissa Subramoney