This July, the Department of Mineral Resources and Energy (DMRE) for the very first time missed the Wednesday deadline for adjusting the country’s fuel prices as a result of delays in the formation of the new Government of National Unity.
Since the introduction of the Working Rules to Administer the Basic Fuel Price methodology in March 2003, which replaced the previously used In-Bond Landed Cost formula, fuel prices have been adjusted on the first Wednesday of every month without fail.
However, this month it was different.
According to Reggie Sibiya, CEO of the Fuel Retailers Association (FRA), the DMRE first issued a press statement late Tuesday evening declaring that fuel prices would be adjusted on the Wednesday, but the department later backtracked on its statement and said that the changes would instead take effect on Thursday.
This was because the minister responsible for signing off on the adjustments was only sworn into Cabinet on Wednesday, 3 July.
The confusion saw some service stations lower their prices prematurely, leading to these retailers suffering huge losses, Sibiya told SABC News.
A costly mistake
While it is difficult to quantify exactly how much the early adjustments cost retailers in the country, we can determine a ballpark figure.
The RFA estimates that the annual volume of retail petrol sales in South Africa is approximately 10.7 billion litres, with diesel sales coming in at a slightly higher 12 billion litres.
Divide this by the number of days in a year, and we arrive at a total of around 29.3 million litres of petrol and 32.9 million litres of diesel sold across the country every day.
For July, petrol prices were slashed by R1.05 per litre for 93 unleaded and 99c per litre for 95 unleaded. Likewise, diesel rates dropped by 30c per litre for 500ppm and 24c per litre for 50ppm.
This is additional revenue the filling stations missed out on by dropping their rates a day early.
Therefore, the untimely price adjustments could have collectively cost fuel stops in South Africa between R29 million and R30.8 million in lost petrol sales and between R7.9 million and R9.9 million in lost diesel sales for that one day.
In total, the delay may have potentially wiped anywhere from R36.9 million to R40.7 million from service stations’ balance sheets.
The true figure is likely somewhat lower given that not all fuel stations in the country changed their prices a day early, but should nevertheless be a considerable sum.
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