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IT’S OFFICIAL | Govt has started the process to deregulate the petrol price

Business Insider SA

  • The formal process to deregulate the price of petrol has started.
  • Energy minister Gwede Mantashe on Friday gazetted his "intention to introduce a price cap" for 93 octane.
  • That will allow retailers to discount petrol however they see fit, something that is currently illegal.
  • The idea was formally floated in March.
  • Mantashe has been sitting on the pronouncement that kicks off the process for three weeks.
  • For more stories go to www.BusinessInsider.co.za.

The formal process of deregulating the price of petrol in South Africa has started.

On Friday, energy minister Gwede Mantashe published a brief notice on page 106 of the weekly Government Gazette, asking for comment on his "intention to introduce a price cap" for 93 octane.

That starts a 30-day period for public input, before the process can move further forward.

An extract from the Government Gazette, showing th

Mantashe's signature is dated 30 June, which means he has been sitting on the notice for three weeks. 

Even so, the request for comment was apparently published in some haste, with details on how comments can be submitted on the following page, rather than included as part of the notice.

Moving to a maximum price, or price cap, would allow petrol retailers to discount fuel however they see fit, with price specials, bundles, or volume discounts.

At present, the exact price of petrol is set by the government and it is illegal to sell petrol at any other price.

In late March, finance minister Enoch Godongwana disclosed that Mantashe was looking at such a move, as one of a package of measures to be introduced after temporary measures to bring down the petrol price expired – which had been due on 1 June.

(The temporary measures were extended, and are now due to be fully withdrawn in early August.)

In April, Treasury put that proposal before Parliament.

Mantashe provided no detail on how a price cap would be calculated, when it would be implemented, or how it would be enforced. 

Proponents of deregulation have long argued that allowing petrol discounts would bring price innovation to the market.

In 2019, the National Treasury proposed a review of fuel price regulation, particularly "where regulation has purposefully supported incumbents such as Sasol", but not everyone was convinced that would benefit consumers more than it would expose them to price volatility.

See also | Treasury wants to deregulate the petrol price - but an analyst believes this will not bring cheaper fuel, only more price volatility

Earlier this month, the DA submitted legislation to deregulate the petrol price, saying it estimated doing so could "lower the price at the pumps by up to R9 a litre".

Others have been somewhat less optimistic, with the Solidarity Research Institute saying in April it estimated deregulation would save R2.28 per litre.

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