Retailers realise significant drop in fuel volumes from last year

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.