Petro SA which imports diesel into the South African market notes that while demand for the fuel has shot up in light of incessant load shedding, the market remains well supplied, even seeing a downward trend in prices, due to a boost in international supply from different regions.
As a state-owned company, it has been focused on assisting Eskom to be well-supplied with diesel to bring down the higher stages of load shedding.
Vusi Xaba the executive of trade and supply for Petro SA says it will ensure that Eskom is not exposed to higher pricing.
“Whenever there is an erratic demand that we see in the market, we do what we call float one or two ships at a particular time with good economies, so that we ensure that Eskom is not exposed to higher pricing. So as we’re doing that, we’re able then to stabilise the spend from the Eskom perspective,”
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Petro SA says in line with the government’s move to create a national oil company, it is already working right across the fuel supply chain with various partners to better ensure energy security in the country and that in the long-term, securing more crude oil refinery capacity in the country is a key goal. Be that as it may, load shedding has retched up the cost of doing business, with fuel service stations’ profitability under pressure as they ironically have to utilise diesel to run their operations.
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The CEO of the Fuel Retailers Association Reggie Sibiya says this is a cost of doing business.
“On average, or minimum you’ll find that service stations are spending R1500 per day, especially if there’s Stage 6 load shedding and that also can equate to about ranging from R45000 to about 90 000 a month.”
Sibiya reiterates that as a multiple of cost burdens rise, namely general inflation and higher interest rates, this could also adversely affect the retention of jobs.
Sibiya says the Fuel Retailers’ Association is calling on the government to intervene to alleviate the pressure.
“We’re calling here for the DMRE to listen to us on these calls for diesel and operating these generators because this is over and above the under-recovery, we’ve been having on credit cards. So if somebody buys diesel with credit card, it’s a double whammy because you are actually losing on the credit card cost and also you losing on the product that you’re utilising to run the service station,” he said.
The Reserve Bank has warned that as people look to alternatives to power their homes and businesses, like diesel generators, this is likely to add at least half a percentage point to inflation this year. Unfortunately, it looks as though the cost of credit is also set to rise further when the central bank announces its rate decision next week.