Fuel retailers want ‘load shedding’ help from oil companies

Oil corporations are beneath strain to come back to the rescue of gas retailers, who’re struggling due to the extra expenditure they’re incurring because of load shedding and losses on their gas stockholding when petrol costs lower.

The retailers declare they’re additionally not absolutely compensated within the gas value for the price of debit and bank card gross sales.

Cassim Kharbai, who co-owns two Engen franchise gas filling stations and sits on advisory panels for the seller community, stated an evaluation of the affect on gas sellers of operating a generator prior to now 13 months confirmed that this price from about R145 000 as much as R257 000 for the yr.

Kharbai harassed these are new prices and there have been additionally further prices to keep up and repair turbines.


The gripe from the service station community is that though load shedding is a authorities and nation downside, Engen and different oil corporations profit from secure or greater gas gross sales however the gas sellers are bearing the price of operating turbines throughout load shedding, he stated.

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“It’s an absolute loss to run a shift from midnight to 5am. There’s nothing occurring. That’s what sellers are up in arms about. They [oil companies] aren’t giving us the choice to shut between these hours,” stated Kharbai.

“Nevertheless, it turns into a safety danger in case you are in whole darkness and your web site is closed.”

He added that discussions with the oil corporations about websites remaining open 24/7 are ongoing.

Homeowners footing the invoice

South African Petroleum Retailers’ Association (Sapra) chair Henry van der Merwe on Monday confirmed that gas retailers are beneath strain due to generator-related prices, with the price of diesel for turbines and the operating price and repair charges now being taken from the underside line of service station homeowners.

“Due the character of our enterprise we’re obliged to remain open as we provide gas to important providers resembling SAPS [SA Police Service] and safety corporations.

“Our electrical energy invoice doesn’t lower on account of load shedding and I’m not conscious of any oil firm that’s remunerating their sellers to compensate for his or her loss,” he stated.

“The seller councils are having these negotiations with their oil corporations.”

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Photo voltaic?

Kharbai stated gas sellers are additionally upset with the strategy of oil corporations to photo voltaic power at websites.

“Sellers are ready to make the capital funding in a photo voltaic answer however the oil corporations are reluctant [to let them] as a result of they don’t personal the property … the asset belongs to the oil corporations.”

He added that many Shell and Engen websites have photo voltaic panels on the parking canopies however this ends in minimal financial savings to gas sellers, with the oil corporations taking the complete good thing about the photo voltaic power saving on the idea that they made the funding and are due to this fact utilizing it as one other revenue stream.

“We’re scorching on their heels in that they need to enable sellers to profit from the answer if there isn’t a reduction coming from the oil firm facet in direction of funding the price of utilizing turbines as they’re they solely ones gaining as a result of gas gross sales haven’t dropped however the price to do enterprise is borne completely by the seller versus the oil firm,” he stated.

Gasoline value decreases add to retailers’ pressures

Kharbai stated these further prices have added to the burden on gas sellers due to losses starting from R80 000 to as excessive as R200 000 a month on their stockholding when the gas value decreases.

“The loss in December was R2.06 per litre, which is greater than you make on gas.

“On common sellers will make about R1.70 per litre on gas. That’s your seller margin for a franchised web site. For a non-franchised web site it have to be nearer to R2.00 per litre.

“On diesel, the loss was as excessive as R2.81 per litre and December was the month once we actually began feeling the affect of the load shedding and the generator prices to maintain the websites operating had been R30 000 to R90 000 for the month.

“It’s good for enterprise if the [fuel] value comes down however the price to do enterprise in the meanwhile is what is actually taking its toll on the community,” stated Kharbai.

Van der Merwe confirmed that the lower in gas costs in December and January had a severe affect on sellers as a result of they needed to promote their gas stockholding after the value lower at a loss.

ALSO READ: Ramaphosa: No short term solutions to end load shedding

“Relying on the turnover of particular person websites, they get one to 2 deliveries per week. The seller has to promote gas at a loss from the primary Wednesday of the month till [their] subsequent supply.

“The oil corporations will take motion if you happen to run dry earlier than your subsequent supply. The answer is that oil corporations ought to do value forwarding and scale back the value earlier earlier than the primary Wednesday of the month or inventory on consignment, then the oil firm takes the chance.

“The issue for sellers is that when it’s inventory on consignment the seller earns much less margin when it comes to the regulatory accounting system [RAS],” he stated.

Makes an attempt to acquire remark from Engen, Shell and Astron Power, the brand new model identify for Caltex, and from the Gasoline Retailers Affiliation (FRA) had been unsuccessful.

ALSO READ: Load shedding puts a damper on mining output

SA Petroleum Industry Association (Sapia) govt director Fani Tshifularo stated these points haven’t been dropped at his consideration and believes it is because Sapia primarily offers with wholesalers, not retailers.

Extra challenges …

Kharbai stated the fee expenses on debit and bank card transactions is one other main subject negatively impacting sellers.

He stated this price depends upon the sellers’ turnover however on common a small web site pays R25 000 fee a month on these transactions.

Van der Merwe stated the bank card price is a large excellent subject however no person appears to need to become involved in resolving it.

He stated the problem is that sellers will not be remunerated when it comes to RAS for debit and bank card transactions and Sapra is concerned in discussions with banks, the Reserve Financial institution, and the Division of Power.

“Sellers are paying a share of the gas value as a value to banks. The defence of the banks is that it’s the interchange charge of Visa and Mastercard and so they can do nothing about it.

“However I’m of the opinion that the banks are making unfair margins and that’s the place they’re getting the cash for his or her loyalty programmes,” he stated.

Van der Merwe stated the answer to this subject is that customers ought to pay the price if sellers will not be remunerated when it comes to RAS or the seller ought to pay a set transaction price per transaction and never a share of the price of the transaction.

Tshifularo stated Sapia is conscious that retailers have been elevating the problem of bank card prices that aren’t absolutely reimbursed.

“The DMRE [Department of Mineral Resources and Energy] has been promising to do one thing about it but it surely’s not a difficulty that we’ll be coping with at Sapia degree.”

This text initially appeared on Moneyweb and was republished with permission.
Learn the unique article here.

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