FUEL retailers are facing petrol and diesel shortages due to problems with the petroleum supply chain and have threatened to shut down service stations until their plea is taken seriously.

Fuel Retailers Association (FRA) chief executive Reggie Sibiya said yesterday that fuel shortages were being felt by “various oil companies and wholesalers” in the country.

“Some retailers are struggling to get any supply from the refineries and distributors that were shut down during lockdown. At the start of the shortage some weeks back, it seemed like the problem would be mitigated in the short to medium term. However, it is continuing and has already resulted in severe consequences for some retailers,” Sibiya said.

“For the fuel retailers, this is a very thorny issue. They lost up to 80% volumes during the level 5 and 4 lockdowns due to no product demand. To now not get product when the demand has slightly increased is an absolute mockery,” he said.

Sibiya said government needed to hold oil companies, which were members of the SA Petroleum Industry Association (Sapia), accountable as they had “got away with this for ages with no imminent recourse”.

He said fuel retailers were held in breach of contract when they ran out of fuel, but there was no recourse against oil companies for supply shortages because of “onerous and one-sided agreements”.

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DURBAN – The majority of South African fuel service stations were just barely making it to survive with the significant drop in volumes in the face of the Covid-19 imposed national lockdown.

The Fuel Retailers Associations (FRA) chief executive Reggie Sibiya said that the latest volume drop snapshot survey to FRA members indicated that April 2020 fuel volumes versus April 2019 have dropped by between 80 and 90 percent.

“Some sites though few have shown an improvement to levels around 60 to 70 percent drop with the introduction of the level 4 regulations. Even 60 percent volume drop is not a sustainable picture as the majority of service stations revenue comes from fuel. The snapshot survey shows a similar trend also on shops turnover decline as the fuel,” said Sibiya.

FRA said that they were however not certain as to how many of the people who have been released to work under level 4 actually owned vehicles. Sibiya said that their suspicion was that the majority of people owning vehicles were still at lockdown at home as they had means to work online and through virtual meetings.

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The retail margin to fuel service station owners is based on a fixed cents-a-litre formula determined by the government. 

The FRA has pleaded with the oil companies to assist with dealing with next month’s anticipated fuel price decrease, said Sibiya. 

Under the lockdown, service stations are required to provide both fuel and groceries as an essential service, not only to the public, but also to designated services such as police and ambulances to save and protect lives. 

However, their main source of income is from fuel sales. 

The lower demand for fuel – as much as 90percent at some service stations – meant fuel retailers have excess stock that they had bought at higher prices, which they were going to have to sell next month at sharply reduced prices, or effectively at a loss, Sibiya said.

“Most service stations are barely surviving. Cash flow is under extreme pressure,” he added. 

And fuel retailers believe their financial problems will continue after the lockdown, as most customers have adapted to working from home, thus significantly reducing the demand for fuel. Retailers have had to introduce short time for their workers due to the lower activity levels on forecourts.

“The FRA is trying to assist its members to access the Unemployment Insurance Fund. However, with demand from all businesses in the country, this process has not responded quickly enough due to backlog,” said Sibiya.

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