Western Cape Business News

Send  Share  RSS  Twitter  04 Apr 2012

FUEL PRICE: Business Welcomes Government Review


Recent Western Cape Business News

THE Cape Chamber of Commerce and Industry has welcomed the Government decision to review the way in which the basic fuel price is calculated.

This review is long overdue,” said Mr Michael Bagraim, President of the Chamber. “The basic formula to set prices was negotiated in Apartheid times when the country was under threat of oil embargoes and sanctions and the Government was in no position to secure a good deal for the people of South Africa.”

It has left us with a formula designed to keep prices high. Any move to discount fuel prices has been slapped down as we saw when Pick ‘n Pay tried to discount petrol.”

Mr Peter Hugo, Chairman of the Chamber’s Transport portfolio committee, said fuel prices were based on what it would cost to import refined products from Europe and Singapore. This was more expensive as the refined fuels were dangerous cargoes and were usually transported in smaller ships which had to pay high insurance premiums.

It is cheaper to import crude oil in large tankers and refine it here but the benefits of local refining are not being passed on to business and the consumer,” Mr Hugo said.

He said diesel prices were controlled at wholesale level and service stations were able to offer discounts. They would also offer discounts on petrol if they were allowed to do so.

Mr Gordon Metter, Deputy President of the Chamber, said the increase of 38 cents in the basic fuel price was the result of high international oil prices, but the other 32 cents came from decisions which were difficult to justify.

Twenty cents goes to the fuel levy and it will disappear into general government revenue, but it comes at the same time as the Government is giving R5.8 billion to the Gauteng freeway project. This gives us the impression that business and motorists throughout the country are now being asked to help pay for the Gauteng freeways.”

The next eight cents were for the Road Accident Fund which had a history of poor management and scandal. The final four cents a litre was to help pay for the new pipeline from Richards Bay to Gauteng, another project where the costs had soared way over budget.

This means that 38 cents a litre of the increase will pay for the fuel while the other 32 cents will be, in one way or another, a payment for bad management,” Mr Metter said.



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