Johannesburg - The problems arising from
having an unregulated wholesale price for liquid fuels, including petrol
and gas, but a fixed price for the retail supply, was the focus of
discussions in Parliament’s energy committee yesterday.

Industry players told the portfolio committee,
chaired by ANC MP Sisa Njikelana, that there was a danger of driving a
considerable number of petrol service stations out of business because
of the high input costs, which were also variable because of the impact
of changing wholesale prices.

The instability of the rand and the fluctuating
oil price meant that for every landing of fuel at a retail site – on
average about 400 000 litres – a R1 increase in the fuel price meant an
extra input cost of about R40 000. Squeezed profit margins did not make
doing business in the downstream industry any easier either.

Both the department and industry players
complained that the cosy deals between big players and white-dominated
business kept out black players and suppressed the growth of small and
medium-size enterprises.

Tseliso Maqubela, deputy director-general
hydrocarbons and energy planning, said there were examples of
“evergreen” agreements where retailers were not able to sell to new
black retailers because the big oil company involved wanted to give the
business to someone else – normally white.

Of the 4 453 retail licences granted, about 60
percent were owned by the big oil companies. Of the remainder that were
dealer-owned, only 22 percent were black and they were bogged down by
the high cost of loans, Maqubela noted.

Black business people were routinely overlooked
when it came to getting more lucrative opportunities at high-volume
sites, he said.

Maqubela said ways of resolving the
“transformation” problems included setting up a charter council to
police the industry and to carry out an audit of transformation.

Reggie Sibiya, the chief executive of the Fuel
Retailers Association, said problems arose because 60 percent of sites
were owned by oil companies and the margin between the wholesale price –
which fluctuated – and the fixed retail margin was squeezing retailers.

He hoped that South Africa would not reach the
stage that Germany had reached, where a site operator needed to own and
manage three outlets in order to be profitable.

ID MP Lance Greyling said if the goal was to
transform the retail side “then we need to ensure that we are not
setting people up for failure”.

He said: “Ultimately, we need to ensure that
the regulatory regime operates in a fair manner across the entire value
chain and does not squeeze only one part of that chain, as it seems to
do currently.

“We also saw in the case of liquefied petroleum
gas how the department only regulated the maximum retail price, which
basically cut the retail margin to such an extent that it led to a
shortage of distributors.”

Maqubela also argued that the number of refineries was limited.

There are the Enref and Sapref refineries in Durban, the Caltex refinery in Cape Town and Natref in Sasolburg.

The dominant petroleum companies are BP,
Chevron, Engen, PetroSA, Shell and Total SA. Together they are the
distributors of petroleum products in the country. - Business Report