At the start of the year, South Africans were introduced to the bone-chilling thought of fuel prices above the R20 mark. Seven months later and we are already at R26 per litre. But unmanageably high fuel prices doesn’t have to be our new reality, if three key changes are implemented, says the Democratic Alliance (DA).
Kevin Mileham, the DA’s spokesperson for Mineral Resources and Energy, claims that the fuel price can be reduced to R17.50 per litre. Based on their proposal, they would be able to lower current fuel prices by up to R9 per litre, if changes are made to the general fuel levy and the Road Accident Fund levy, and if the Fuel Deregulation Bill is passed into law, as per IOL.
The first proposal is to scrap the general fuel levy, a tax on fuel price that is used to fund the day-to-day projects of the government. That could knock R3.93 per litre off the overal fuel price.
A further R2.18 per litre can be saved if the Road Accident Fund levy gets amended “to allow those road users who have valid comprehensive third-party insurance and can prove that they have it to claim a tax rebate when they submit their annual tax returns against their fuel purchases”.
Finally, the DA wants to allow for competition in the fuel sector by introducing a new Fuel Deregulation Bill. At the moment, South Africa is one of the few countries whose fuel prices are determined by the government, and not by the market. If the Fuel Deregulation Bill gets passed into law, the market would take control of the prices, allowing people to import cheaper fuel, wholesalers to distribute cheaper fuel and retailers to compete on the basis of price.
“It is not targeted at the retailer and wholesaler margin specifically. It is targeted at the entire fuel price and the entire fuel value chain. There has been a concern raised that this proposal will drive people to self-service petrol stations.
“We are specifically leaving the element of the Petroleum Products Act, which this bill seeks to regulate in that it prohibits self-service at petrol stations. So that is not a concern,” said Mileham.
Another concern is that deregulation of fuel prices might result in anti-competitive practices, price manipulation or monopolistic practices. But 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.
“We have obligated the Minister of Energy to monitor fuel prices and where he becomes aware of such behaviour to immediately report it to the Competition Commission.”
According to Mileham, their proposal seems favourable amongst the public. More than 139 000 people have signed a petition to implement these changes, and Mileham has written to Mineral Resources and Energy Minister Gwede Mantashe.
“The Fuel Deregulation Bill will go to Parliament and has the support of various industry bodies, including long-distance freight associations, bus companies and taxi associations and the like.
“This bill is in the interest of bringing the price down, to make fuel cheaper for all South Africans.
“We need to recognise that the fuel price has an enormous impact on the everyday cost of living,” said Mileham.