If you’re buying on credit at your friendly filling station you have to take two credit cards with you, one for fuel and one for the other stuff.
So sensitive were the authorities in the past to the spectre of discounted petrol, that a whole separate credit card had to be issued just to ensure there was no discounting, otherwise the whole magnificent construction set up to ensure fuel security for apartheid South Africa could come tumbling down.
It is not remarkable that PW Botha and his lot went to great lengths (not to mention cost) to keep fuel flowing, but more remarkable, perhaps, is that 13 years into democracy, the whole blasted edifice remains firmly in place, save a tweak here and there.
Every so often, though, a report comes along, where, if you use a telescope, you can see car lights at the end of this tunnel. The first such report was one by the Competition Tribunal, which disallowed a proposed mega merger between Sasol’s fuel business with Engen. Tribunal chair David Lewis in an off-the-cuff remark likened the country’s fuel industry to central planning in the Soviet Union.
The second, more recent, is the Rustomjee committee, which has looked into fiscal reforms for the liquid fuels industry as part of an investigation that included recommending a new dispensation for the synthetic and renewable fuels industries.
The latter report was done for the treasury. Note that neither report was generated for the department of minerals and energy, even though it has the primary responsibility for liquid fuels.
The windfalls task-team report, as it is generally known, has a lot to say on reforming the fuels sector and suggests a list of stuff that can be done tomorrow and without any fuss. The first calls for the present price system to be used only as a price cap mechanism, meaning that the present prices, which the department produces each month, would be maximum prices only. As is the case with diesel, each retailer who can discount this price should be allowed to.
The windfalls task team even sees the prospect of — shock! horror! — retailers offering attractive credit deals to entice you to their service stations. The day where you can buy your petrol and can of Coke using the same credit card may not be far off.
One observer tells me he asks motorists if they have ever queued for petrol. None has ever answered in the affirmative. His reasoning is that you queue at Woolworths and Pick ‘n’ Pay, why not queue for petrol if a good deal is in the offing?
Diesel at present sells by as much as 40c a litre lower than the recommended price and bulk buyers have been able to negotiate themselves favourable deals. If you’re big enough, you can save yourself millions buying bulk diesel.
The windfalls task team also want the verneukery which is the BFP, the base petrol price, revisited to get a calculation that is fairer to consumers. It noted evidence to the tribunal that the BFP is biased in favour of the oil companies by 5c a litre while the Moerane committee, which looked at fuel shortages, found the bias was worth 10c a litre. Since the country consumes 20-billion litres or so of fuel annually, these cents amount to more than chump change.
But this one the department can make some claim to have done something about. It did scrap the former base price, the IBLC, in favour of the BFP, using a non-transparent process that seemed to be little more than chucking a few ideas around with the oil industry, rather than opening the process to proper, independent and rigorous inquiry.
The windfalls team also say that inland producers (read Sasol and to a small extent Total) have an unfair advantage because infrastructural constraints mean that competitors’ products cannot be piped into the country’s industrial heartland. They have calculated this advantage very precisely at 15c a litre or R709-million annually and suggest a levy equivalent to this amount be paid over to motorists until the infrastructural imbalances are rectified.
The task team also recommends that import restrictions on fuel be lifted, allowing the free import of refined fuel. This would open the way for supermarket chains such as Pick ‘n’ Pay to import petrol, particularly for sale in the coastal areas. Supply blockages would prevent a similar strategy being used in Gauteng.
The windfalls report notes that the department has a set of investigations under way. It has several inquiries happening including into MPAR, the formula that encourages greater and greater investment into fancier and fancier fuel stations, price zone differentials (petrol is cheaper in Durban than in Johannesburg). Other inquiries are into pipeline charges and service delivery costs. The department has a good track record in inquiries and investigations, but is less accomplished in producing any recommendations, never mind acting on them.
Retail price capping, says the windfalls committee, would lead to increased competition and this would “thin out the population of service stations in those areas where there are more service stations than market forces can sustain.
“As this happens it is expected that the average volume through-put or size of service stations will increase and this in turn will allow the retail margin calculation to be reduced to the ultimate benefit of the motorists and the economy,” it says, noting that the continued employment of pump attendants is protected by the Petroleum Products Amendment Act.
I did call up the department of minerals and energy to see what it thinks about price capping as a mechanism to help move this sector finally into the new South Africa. I was told that this is a possibility, that the report would be looked at and that a proper, formal internal discussion could follow.
Don’t tear up that second credit card you use only to buy fuel just yet.