Sasol has reacted with “astonishment” to the Democratic Alliance’s proposed plan to reduce the price of fuel.
The DA on Tuesday called on petro-chemical giant Sasol to pay between R2,5-billion and R4-billion in an additional “supertax” to bring down government fuel tax between 15 cents and 20 cents a litre.
The newspaper quoted the party as saying Sasol owed this to taxpayers as repayment for the substantial sums it had received in government subsidies since the 1980s.
Responding on Wednesday, Sasol charged, however, that the DA’s media statement contained a number of factual inaccuracies and incorrect assertions about Sasol and the broader oil industry, adding that it “would be most happy to engage with the DA in this regard”.
“Sasol is aware of the fact that oil prices are high and we empathise with motorists who have had to bear the brunt of recent fuel price hikes. The price of crude oil as an internationally traded commodity will always affect the price of petrol at the pump in South Africa, as more than 70% of the country’s crude oil requirements are imported and refined locally. This means that less than 30% of fuel is manufactured locally from coal or gas,” the synthetic fuels giant said.
It added that international fuel prices were at a high point due to concern about oil reserves and a dearth of refining capacity, which has been compounded by a particularly active hurricane season in the United States.
“Petrol prices in SA are regulated based on international price levels. However, compared to other countries such as Japan, Spain, France, Italy, Germany and the UK, South Africans are still paying significantly less per litre at the pump. At current rand value people in the UK are paying R11+ per litre and in Japan about R7,60 per litre.
“If the DA’s supertax proposal were to be accepted, this would inevitably have an impact on SA’s perception as an investment destination. As Sasol is SA’s single biggest tax payer and direct capital investor, the company is already ploughing back a significant part of its profits into the SA economy,” Sasol argued.
It said the tariff protection dispensation for synthetic fuels had lapsed six years ago and had not been renewed.
“The payback provision referred to by the DA was not part of the tariff protection dispensation.
“Sasol produces approximately 150Â 000 barrels per day of synthetic fuel from coal, which accounts for about 25% to 28% of the country’s fuel needs.
The bulk of this fuel, along with Sasol’s 64% share in the Natref refinery (which produces about 10% of SA’s fuel needs) is sold to the multinational oil companies operating in South Africa at negotiated prices. Sasol’s current share of the retail fuel market is about 7%,” the fuel company said.
It added that Sasol’s strategic importance to South Africa could be defined in strong terms and any advantages drawn from previous dispensations have been repaid to the nation in manifold ways:
- Sasol’s total capital investment in SA was R24-billion in the four years to
last year. This represents almost 90% of SA’s total foreign direct investment of R27-billion over the same period.
- Provides direct and indirect employment for about 117Â 000 people, about 2% of the formal employment sector;
- Contributes about R40-billion or 4% to national gross domestic product
- Saves the country more than R29-billion a year in foreign exchange;
- Supplies about 40% of the country’s liquid fuel requirements (28% from
coal and 12% from crude oil);
- Produces 18% of the country’s saleable coal;
- Contributes 13% and 12% to the gross geographic products of the Free
State and Mpumalanga provinces respectively;
- Contributes more than R6-billion annually to the government of SA in
taxes and levies;
- Commits about R100-million annually to social investment and university
bursaries. – I-Net Bridge