With only three days left before the record fuel price hikes, many forecourts in South Africa are running out of diesel, prompting the country’s two biggest farming organisations, AgriSA and Agbiz, to call for an immediate fuel price adjustment.
The organisations believe that this will bring some stability to the market, which is currently experiencing panic buying and rationing in many regions. Avhapfani Tshifularo, executive director of the Fuel Industry Association of SA, told reporters that there has been an increase in fuel stations without diesel ahead of the price hike.
Fuel Shortages Hit Farmers Hard
A survey conducted by AgriSA and Agbiz among farmers and fuel retailers over recent days shows that many regions are experiencing low supply and rationing, which is beginning to affect normal farming and agribusiness operations at a critical time in the production cycle. The Northern Cape is especially hard hit, with fuel stations in Kakamas and Upington reporting that they don’t have diesel.
According to the South African Government, the retail price of petrol and wholesale diesel prices are only adjusted once a month, meaning importers and wholesalers must absorb sudden increases in global prices until the next adjustment. This has led to fuel suppliers holding onto their stock in anticipation of price increases next week, as stated by Minister of Minerals and Petroleum Resources Gwede Mantashe.
Proposed Solution
To stabilise the situation, AgriSA and Agbiz want an immediate, out-of-cycle fuel price adjustment to better reflect current market conditions. They also propose that the government adopt more regular reviews of fuel prices, allowing for a more flexible pricing mechanism that would enable importers to recover costs and continue bringing in supply.
Some of the affected areas include independent fuel stations in small towns in the Western and Eastern Cape, as well as in parts of KwaZulu-Natal. Rural fuel stations in Mpumalanga and the Free State have also been badly affected, with diesel sale curbs in place, ranging from 40 to 100 litres per customer.
Here are some key points to note about the fuel price hike:
- Diesel price is expected to increase by more than R10 a litre
- 95 unleaded petrol price is expected to increase by more than R5.80
- Fuel suppliers are holding onto their stock in anticipation of price increases next week
- A more flexible pricing mechanism is proposed to enable importers to recover costs and continue bringing in supply
As the situation continues to unfold, it remains to be seen whether the government will heed the call for an immediate fuel price adjustment. In the meantime, farmers and fuel retailers are bracing themselves for the impact of the record fuel price hikes.
