Service stations seek higher retail margins

An increase in the retail margin will ease the financial strain that has affected several operators since the series of fuel price increases last year and earlier this year.

The minerals and energy department fixes the retail margin on the basis of costs incurred by service station operators in order to distribute petrol. The costs include rent, labour and overheads.

Fuel Retailers Association CEO Peter Morgan said last week the body was hoping for an increase in the retail margin next month.

He, however, did not reveal the extent of the increase the organisation sought.

Minerals and Energy Minister Buyelwa Sonjica approved an increase of 5c/l earlier this year. The retailer had asked for 11,94c/l.

A delay in the implementation of the increase would worsen the financial strain which the operators were facing.

As an employers' organisation, the retailers' association is under pressure to honour a wage deal, sealed with trade unions last year.

Morgan said the deal, that would see an 8% wage increase for pump attendants, was due to be effective from this month.

“We can only honour the deal if there is an increase in the retail margin.”

The National Union of Metalworkers of SA, which counts petrol attendants among its members, said last week that it was aware of the fuel retailers' dilemma.

Spokesman Mziwakhe Hlangani said that the union was aware of the battle with low retail margins.

The continued over-recovery of daily prices of petrol has raised prospects of an increase in the retail margin next month.

Minerals and energy department spokesman Bheki Khumalo last week said Sonjica would later this month receive and consider a technical report by the department's officials on the retail margin.

“The minister is not oblivious to the challenges faced by retailers. She understands that their margins are tight,” Khumalo said.

She also said a decrease in the petrol price “gives the minister a whole lot of possibilities in the handling of the retail margin issue”.

Source: Business Day

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