Home South African Covid-19 lockdown: Petrol stations struggle to stay afloat

Covid-19 lockdown: Petrol stations struggle to stay afloat

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While motorists can expect another relief on the price of fuel next month, fuel retailers are struggling to stay afloat due to a decline in sales and profits.

DURBAN – While motorists can expect another relief on the price of fuel next month, fuel retailers are struggling to stay afloat due to a decline in sales and profits.

According to the Automobile Association, mid-month data has pointed to a petrol price decrease of R1.89 a litre, while diesel looked set to drop by around R1.17 and illuminating paraffin by R1.88.

However, while this is good news for motorists, several petrol stations across the country were struggling financially due to fewer motorists on the road, which is a result of the lockdown.

Some petrol station owners have opted to operate limited hours compared to the normal 24 hours while others have cut down on staff to minimise cost. This was according to the study conducted by the National Employer’s Association of South Africa (Naesa) which represents business owners in the industry.

The survey painted a grim picture ahead, and the association has since made an urgent appeal to the major oil companies to assist fuel retailers in practical ways to survive the current adverse trading situation.

The association said the biggest threat to the survival of fuel retailers was the drastic decrease in turnover brought about by the state of lockdown.

The study revealed 60% of filling stations owners cited decrease as the biggest problem they were faced with.

Gerhard Papenfus, Naesa chief executive, said several fuel retailers indicated they would experience difficulty in paying rent during the period of lockdown. Despite most having introduced skeleton staff or short time, they indicated they were not in a position to fund remuneration.

“As an essential service, filling stations have to remain open, normally 24/7, leading to sustained costs, with virtually no income. Some of our members cited the lack of cash-flow as a major impediment as the survival of the industry is largely dependent on cash-flow.

“During this lockdown, there is obviously nothing that can be done in order to increase turnover as motorists are locked in, and only emergency and essential services vehicles may currently travel.

“Furthermore, as a result of the more expensive fuel in their tanks when the price of fuel dropped, fuel retailers are experiencing severe losses.

“When we analysed the situation, it is clear that relief to fuel retailers is primarily in the hands of the major oil companies. In this scenario, the fuel retailers have very limited, if any, negotiating power.”

Layton Beard, Automobile Association spokesperson, said the fuel prices were expected to decrease further in the coming months.

“Although the demand is currently low in our country, the price drop could be attributed to the decline of the petroleum rate. At this point, we cannot tell how long the decline will last,” he said.

Sunday Tribune