Increasing calls from the public for the petrol price to be deregulated speak of ignorance, warns Fuel Retailers Association (FRA) CEO Reggie Sibiya.

“As fuel prices continue to rise, there is pressure on retailers to cut margins and be in competition with each other, which is absolutely impossible. If you look at the retail margin, it is R2.28 a litre.

“People think there is a lot to share in the margin – there is nothing to share. We actually need more to sustain our businesses.”

Sibiya says that countries such as the UK, where the fuel price has been deregulated, hit a petrol price of more than R35 a litre in June.

“We must realise that deregulation will not drive prices down on an ongoing basis.”

Deregulation could also mean that people will have to fill up their own tanks and pump their own tyres, adds Sibiya.

It must also be taken into consideration that numerous service stations are run as “highly geared” small and medium-sized enterprises, he notes.

A continued flow of new entrants into the market is also “making the cake smaller”.

The recent steep hikes in fuel prices, twinned with the Covid-19 pandemic, have also led to a dramatic reduction in fuel sales, says Sibiya.

“Some service stations lost up to 80% of their volumes during the pandemic. They are still in the process of recovering from Covid-19.”

Sibiya notes that job opportunities at service stations are related directly to sales volumes, and that the industry may see job losses if volumes do not recover or if margins are affected.

“Then, on top of that, we see illegal trading where wholesalers are selling fuel directly to the public,” laments Sibiya.

“If you are a wholesaler, you must operate as a wholesaler.

“You cannot go and start retail sales. But this is rampant. We are pushing the Department of Mineral Resources and Energy to manage this situation, which is getting out of hand.”

Sibiya notes that it is important for the fuel retail sector to “unify as an industry”, otherwise “government becomes a winner that takes all”.