The proposed new petroleum retail licensing system will pave the way for numerous Sasol and PetroSA franchises and that could have far-reaching consequences for the already overtraded fuel vendor market, Parliament was told on Monday.
The proposed new petroleum retail licensing system will pave the way for numerous Sasol and PetroSA franchises and that could have far-reaching consequences for the already overtraded fuel vendor market, Parliament was told on Monday.
The entry of Sasol and PetroSA into the retail market could only aggravate a desperate situation, representatives from African Minerals and Energy Forum (Amef), the Fuel Retailers’ Association and the SA Fuel Dealers’ Association, told the portfolio committee on minerals and energy.
According to , Sasol and PetroSA would enter the market once they ended their agreements with the major oil companies to uplift their synthetic fuel and started marketing under their own brands.
While Amef said new retail licences should only go to black operators, the other groups said all contracts between petrol stations and major oil firms should be reviewed.
This would make way for Sasol and PetroSA to sell through existing petrol stations and for petrol station operators to negotiate better deals with suppliers, the report said.
The SA Coastal Crude Refineries Association is against the bill’s apparent preference for Sasol and PetroSA when it comes to retail licences because the companies produce 40 per cent of the fuel used in the country.
The association represents BP, Caltex, Engen and Shell, which are opposed to a clause in the bill, saying licences could be linked to the amount of fuel made in a given area.
However, the parties agreed the petrol station market was chronically overtraded with, for example, over 60 stations within a 5km radius in Johannesburg while they were scarce in rural areas.
Overtrading has squeezed margins for petrol station operators, forcing many to close and increasing competition through the new licensing system to accommodate new entrants could result in “a bloodbath” with many, mostly black, franchisees going out of business, the committee was told.
Retailers claimed the market was overtraded because the current system of granting margin increases to refineries was partly based on their investment in new petrol stations, the report said.
Furthermore, oil companies could own petrol stations even though they could not operate them, and the more they had, the greater their market penetration. It’s been estimated that the oil companies own 45 per cent of petrol stations.
It had been suggested that construction of new stations should be banned and existing contracts reviewed, allowing Sasol and PetroSA to enter the retail market without adding to the overtrading, the retailers said.
