South Africa’s fuel price shocks are forcing petrol stations to consider cutting jobs, reducing trading hours at night, or even shutting down completely.

Petrol stations across South Africa are under mounting financial pressure as fuel price hikes are causing a decline in customer spending and soaring operating costs.

This is the feedback from Henry van der Merwe, chairman of the South African Petroleum Retailers Association (SAPRA).

Following a large swing in diesel prices in South Africa, petrol prices have now also moved into an over-recovery, but drivers can still expect a hike at the pumps next week.

This is because the National Treasury’s fuel levy relief will start being phased out from June, reversing the recovery trend and pushing petrol prices back into the red.

According to the latest data from the Central Energy Fund (CEF), petrol price recoveries have finally turned positive.

Having started the month with an under-recovery of around 85 cents per litre, petrol prices are now showing an over-recovery of between 3 and 8 cents per litre.

Unfortunately, the over-recovery is nowhere near big enough to offset the coming reintroduction of R1.50 per litre to petrol prices.

This will come as the National Treasury starts terminating the R3.00/litre fuel levy relief it introduced in April.

From June, R1.50 per litre will be added back, with the full relief terminating in July, when the remaining R1.50 will be added.

This will take the small cut on the cards for petrol and turn it back into another huge increase.

At the current recoveries, with the fuel levy added back at 50%, petrol prices are still expected to rise by over R1.40 per litre next week.

Speaking in an interview with CapeTalk, van der Merwe said many motorists wrongly believe petrol stations benefit when fuel prices increase, but retailers’ margins remain fixed regardless of the pump price.

“If we sell fuel at R25 rand a litre, we get R2, and if we sell it at R40 rand a litre, we get R2 because it’s a margin,” he explained.

“So when the high fuel price hits us, the litres go down, and that’s where the problem comes in. So the fuel retailers are really suffering.”

Service stations reviewing operating hours

Henry van der Merwe, chairman of the South African Petroleum Retailers Association (SAPRA).
According to van der Merwe, motorists are changing their driving habits significantly as fuel becomes less affordable.

“A lot of people are driving less. They are planning better, they are using other methods of transport because it’s part of the disposable income,” he said.

He added that many customers, including taxi operators, are no longer filling up their tanks completely and are instead buying fuel in smaller amounts at a time.

The result is a sharp decline in fuel volumes sold at forecourts nationwide, particularly at smaller, rural filling stations that rely heavily on steady fuel sales to remain profitable.

“Those people are phoning and saying we can’t afford to stay open at night because of security risks, because of low litres at night,” said van der Merwe.

He warned that some stations are already considering reducing operating hours, retrenching workers or shutting down overnight operations entirely to cut costs.

“So there’s going to be in the rural areas, it’s going to be a security of supply issue because people are talking of retrenching people because they can’t afford them,” he said.

“Shorter hours—and that’s for the whole country—that’s not a good thing. That’s not what we want, but that’s what is happening on the ground.”

Van der Merwe also highlighted growing concerns about fuel theft, noting that incidents tend to rise when petrol prices increase. “The more expensive the petrol, the more drive-offs they have,” he said.

He stressed that attendants are not held financially liable for fuel theft incidents, with stations instead relying on CCTV footage and police investigations.

On government relief measures, van der Merwe said temporary adjustments to the fuel levy have helped cushion some of the pressure, but warned the reprieve may not last.

Van der Merwe said SAPRA has already engaged with the Department of Mineral Resources and Energy over the crisis.

“We’ve had discussions with the department and the department’s going to have a relook at the whole model, but that unfortunately is not going to happen in two weeks’ time,” he said.

Source: https://businesstech.co.za/news/energy/861639/petrol-stations-considering-closing-at-night-in-south-africa/