Capping petrol price ‘will hit profit and lead to job losses’, fuel retailers warn | BusinessDay

The Fuel Retailers Association, representing more than 2,500 fuel retailers, has hit back at the government’s proposal to cap the price of 93 octane petrol, claiming it will cut into wafer-thin profit margins and accelerate job losses in the sector.

In a bid to ease the pressure high petrol prices are putting on consumers, the department of energy has proposed capping the price of 93 octane petrol. It says that by setting a maximum price, instead of regulating the exact price at the pump, it will encourage retailers to compete in pricing — as is the case with diesel.

A bigger price difference would also encourage inland fuel consumers who are unnecessarily filling up with 95 unleaded petrol to switch to 93. That would ease pressure to import 95 unleaded petrol to meet demand and have a positive effect on the trade balance, the department said.

But Fuel Retailers Association CEO Reggie Sibiya, said the department was wrong to expect the retailers to give away what little profits they made.

According to Sibiya, on the current regulated pump price of R16.85 per litre of 93 octane unleaded petrol, after expenses, the retailer makes a profit of just 14.3c a litre — accounting for just 0.8% of what the customer pays at the pump.

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Capping petrol price ‘will hit profit and lead to job losses’, fuel retailers warn.