By Dylan Bettencourt
- Some diesel wholesalers are charging R2 to R4 a litre extra on top of the government’s new fuel levy cut.
- Northern Cape buyers are reportedly paying up to R5 a litre extra, wiping out the government’s fuel levy cut completely.
The government cut the diesel fuel levy by R3 a litre in April. That brought the price increase for 0.05% sulphur diesel down to R7.37 a litre, instead of the expected R10.
But for many diesel buyers across South Africa, that saving has already disappeared.
Sources told News24 that some wholesalers and bulk suppliers are adding extra charges of between R2 and R4 a litre above the grid price. The grid price sets the wholesale starting point for bulk diesel pricing in South Africa.
In the Northern Cape, some buyers are reportedly being charged up to R5 a litre extra.
Pierre van Eeden, a director of FUELit, a diesel and oil supplier near Kroonstad, said he had personally experienced the extra charges.
“Now, all of a sudden, I’m more expensive than the [Shell] Ultra City next to the N1,” he said.
Van Eeden, who mainly supplies mining, agriculture and logistics businesses, said he had spoken to about 20 other wholesalers and bulk buyers. He said the extra charges varied widely. Farmers in the Western Cape were reportedly being charged about R3 a litre extra.
Diesel pricing in South Africa is deregulated, meaning wholesale discounts and margins are set by the market. When supply gets tight, those discounts can disappear.
The Fuels Industry Association of South Africa and the Liquid Fuels Wholesalers Association both said they were not aware of the extra charges being applied.
Peter Morgan, chief executive of the Liquid Fuels Wholesalers Association, suggested that buyers paying more may be purchasing diesel on the spot market rather than through long-term supply agreements.
Van Eeden warned that if bulk buyers, particularly farmers, are forced to absorb the extra costs, food prices could go up.
“This would have a major inflationary effect on food prices,” he said.
Pictured above: Fuel tanker.
Image source: File
