Engen imposes petrol and diesel surcharges for commercial buyers in South Africa

The South African fuel retailer Engen has imposed a temporary surcharge on its petrol and diesel supply to certain commercial customers.

According to a notice obtained by News24, the surcharge took effect yesterday, 7 April, and applies to both diesel and unleaded petrol.

In the notice, Engen outlined that the surcharge is necessary due to the ongoing Middle East conflict, which has disrupted traditional shipping routes.

As a result of the closure of the Strait of Hormuz, Engen was forced to source replacement cargoes from alternative regions, increasing transit distance, times, and costs.

These factors, coupled with increased freight and logistics costs, vessel insurance premium increases, and disrupted shipping schedules, have affected all major fuel retailers.

Global factors like higher oil prices, lower petroleum product outputs, and a fluctuating rand/dollar exchange rate led to increased petrol and diesel prices from the start of April.

Implementing these increases was inevitable, despite the government’s decision to cut the General Fuel Levy (GFL) by R3 per litre.

The notice obtained by News24 outlined a 48c-per-litre diesel surcharge, as well as a 35c-per-litre surcharge for unleaded petrol.

Engen confirmed that these temporary surcharges would apply to “certain customer segments” and not retail customers or the regulated pump price of petrol.

“Engen remains fully compliant with regulated pricing frameworks, noting that while petrol prices are regulated, diesel prices are deregulated at the retail level and may be set by individual dealers in line with prevailing market conditions,” Engen told News24.

It added that the intervention was unrelated to the R3-per-litre fuel levy reduction and that the company had decided to take the action prior to the announcement.

“While the levy reduction provides short-term relief to motorists, it does not address the underlying cost pressures currently affecting fuel supply,” Engen said.

Petrol stations warned not to capitalise on fuel price hikes

Following the latest fuel price adjustments, the Competition Commission warned petrol station owners and other businesses not to take advantage of recent fuel price hikes.

Speaking to HOT 102.7FM, the commission’s chief economist, James Hodge, declared that investigations will be launched against any forecourts attempting to exploit customers by significantly raising prices.

He warned that the commission would be on the lookout for any businesses attempting to price-gouge its customers – an exploitative behaviour where companies take advantage of disruptions to make massive profits.

“Consumers and even other businesses will be expecting some price increases, obviously at the pump, but also beyond that,” noted Hodge.

The uncertainty around the Middle East conflict and its impact on global oil prices has led to expected fuel price increases, but Hodge warns that motorists are not aware of what a reasonable hike looks like.

There are two forms of price gouging that the Competition Commission is particularly concerned about.

The first is known as “jumping the gun”, where businesses choose to raise the price of a product before the cost has actually gone up.

“You’re sitting with stocks at the old price, which you could sell at the old price, but you choose to sell at the new price,” said Hodge.

Certain forecourts in South Africa have already been guilty of this, particularly for raising diesel prices before the official price adjustment.

As diesel is unregulated in South Africa, prices can vary from station to station, but “jumping the gun” is still condemned by the commission.

Another form of price gouging is when businesses raise prices by far more than the actual cost increase.

For example, should the wholesale price of diesel rise by R5 per litre and a station raises prices by R10 per litre, this would be considered price gouging.

Regarding retailers adding surcharges for certain commercial customers, the Department of Mineral and Petroleum Resources confirmed it was already tending to complaints.