Deregulation, lower fuel levy no answer to record prices
The possibility of deregulating the fuel price drew a mixed response during a debate at the Wits Business School on Wednesday evening.
The Automobile Association (AA), the SA Petroleum Industry Association (SAIPA), Nersa and academics took part in the debate, which comes on the back of record fuel prices.
"We from the AA haven’t taken a firm view on whether the regulation or deregulation should take precedence,” said the AA’s Collins Khumalo.
“Regulation provides transparency to the user. The AA aims to represent the views of the road users. Thus, transparency in a regulated environment shows the user how that price has been made up and what the implications are, if there are any price increases."
“If there is no regulation we believe that it would leave the rest of the country to the vagaries of the market economy, which means that people in the rural areas may not be able to get access to cheaper and affordable fuel. Therefore, there will be a significant skew in that particular situation."
SAIPA agreed with the AA, stating that deregulation would have a dire impact on those living in rural areas.
ALSO READ: The ANC’s solution to everything is more tax, says Maimane
“Deregulation will facilitate the entrance of new players, but let’s look at the rationalization of service station networks what it will entail. You will have fewer service stations but very competitive especially in urban areas, and in remote rural areas some of the service stations will seize to exist,” said SAIPA CEO Avhapfani Tshifularo.
The fuel price in South Africa has reached unprecedented levels, with a litre of 95 Octane petrol costing more than R16 for the first time ever.
Calls have also been made to government to slash prices in both the fuel levy as well as the Road Accident Fund (RAF).
The AA doesn’t believe this would be a solution.
“On a broader note, we feel that the debate is not about deregulation. The bigger issue is of the economy because if you drop the road accident fund or general levy, it will definitely lead to a deficit in terms of what government’s collections are, which means it has to be funded in some way or the other,” Khumalo said.
The Democratic Alliance (DA) will march to Treasury next week to call on government to decrease the contribution made towards the RAF, which consists of R1 per litre.