Today, in the wake of another massive fuel price increase, the DA has handed in our Fuel Price Deregulation Bill to Parliament for processing by Parliament’s Legal Services. This groundbreaking bill will seek to amend the Petroleum Products Act, which gives government the power to prescribe the price of petroleum products.
We intend to publish our ‘Notice of Intention to Introduce’ in the Government Gazette later this week, within which the public will be invited to provide comment on the stated aims of our Bill.
Now the ball is firmly in the ANC government’s court and it has the chance to do the right thing. The success or failure of regulating the fuel price, now rests with the ANC in Parliament.
Given that South Africans will wake up to another hefty fuel price increase that will take the fuel price well beyond R25 a litre on Wednesday, 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.
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.
We are taking the possibility of collusion and the abuse of dominant market positions seriously. The Competition Commission will be tasked with keeping a close eye on the fuel price market. Should any anti-competitive practices be determined, swift investigation and remedial action will follow.
Most consumers spending a significant part of their salaries on ever-increasing transport, and the frequent fuel price increases are leaving many with little to spend on the equally expensive basic food basket. South Africa’s high fuel prices are a consequence of government mandated fuel price controls that have killed competition and failed to deliver efficient cost-reflective prices.
The tragedy of high fuel prices is that their knock-on effects will hit the poorest the hardest at a time when they are already struggling under the consequences of 46% unemployment, loadshedding, soaring global inflation driven by Russia’s invasion of Ukraine and a State increasingly unable to deliver on even its most basic mandate.
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, who happen to get most of their 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.