As South Africa faces its largest petrol price increase on record on Wednesday 6 July, the opposition Democratic Alliance has submitted a Fuel Price Deregulation Bill which aims to deregulate the fuel sector in South Africa.
If accepted, the proposed bill would amend the existing Petroleum Poducts Act, which allows the government to determine the price of petroleum products. As per BusinessTech, the bill is set to be gazetted for public comment in the coming weeks.
DA party’s Kevin Mileham hopes that the bill would ultimately lead to lower petrol prices.”The primary objective of the Bill is to deregulate the fuel sector to increase competition in fuel price-setting at both the wholesale and retail level, which will result in lower petrol prices for consumers, as retailers compete to win customers based on price levels,” he said.
He further explains: “The bill does this primarily through the removal of Section 2 of the Petroleum Products Act. The bill also amends section 2(1)(d) to allow for businesses to implement creative methods of trading which may result in reduced petroleum prices.”
Mileham also states that the bill would allow the Competition Commission to closely monitor the fuel price market and to step in if any anti-competitive practices are determined.
“The regulated fuel price system is rigged against the South African consumer. The average fuel price is composed of at least seven levies that combine to make our fuel one of the most expensive in the region when compared to countries such as Botswana, which happens to get most of its fuel supplies from South Africa.
“Independent estimates indicate that costs and profits at the wholesale, transport, and retail levels account for about 20% of the fuel price. This is unsustainable if South Africa is to have a competitive fuel market and fuel price system that protects consumers from exorbitant increases,” says Mileham.
The new fuel hike that sets in on Wednesday is reportedly due to the increase of international petroleum prices as a result of the ongoing conflict in the Ukraine. Further increases are imminent as long as this conflict is unresolved.
But the Automobile Association (AA) believe there’s more that the government can do to alleviate the financial pressure South African consumers feel amidst the rising fuel costs, regardless of the conflict in Ukraine.
“We understand that government has little leeway in terms of international petroleum prices and the Rand/US dollar exchange rate, which is why we have called, and will continue to press, for a review of the fuel price, an area where the government has control over the fuel price.
“There is a need to interrogate all the components of the fuel price, to determine whether all these components are still necessary in the existing formula, and to establish if the current calculations of these components are correct. The longer this review is not initiated, the longer the country will wait for lasting solutions.”