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Who bears the cost of petrol consumer loyalty schemes?

19 February 2020 10:26 AM
Tags:
Petrol prices
Petrol loyalty schemes
Liquid Fuel Wholesalers Association and South African Petroleum Industry Association debate.

Many of the major filling stations now offer discounts via partnership deals with the big retailer loyalty schemes, and effectively motorists are getting indirect fuel discounts, which is otherwise not allowed by regulation. Is it not time to revisit the issue of deregulating our petrol price as is done in many other countries?

Refilwe Moloto discusses this with Peter Morgan, CEO of the Liquid Fuel Wholesalers Association, and formerly the CEO of the Fuel Retailers Association, and Avhapfani "Fani" Tshifularo, Executive Director of the South African Petroleum Industry Association.

There is no bending of rules at a forecourt level.

Avhapfani "Fani" Tshifularo, Executive Director - South African Petroleum Industry Association.

Morgan says the Petroleum Act has three pillars.

One is transformation, one is to keep the country wet, and the third one is the price that the motorist pays.

Peter Morgan, CEO - Liquid Fuel Wholesalers Association

He says the narrative changes depending on which of the three pillars are being focused on.

When you talk about bending the rules, there is a level of creativity in what is happening at the moment.

Peter Morgan, CEO - Liquid Fuel Wholesalers Association

But only focusing on one pillar will result in a number of unintended consequences that will affect the other two negatively, he says.

How does the regulator, being the minister, balance all three to get the best results?

Peter Morgan, CEO - Liquid Fuel Wholesalers Association

Regarding the loyalty schemes, he says it is not clear how the deals are done between the oil majors and the banks, and whether there is any financial benefit in the deal.

If there is any financial benefit it is not being passed on to any retailer.

Peter Morgan, CEO - Liquid Fuel Wholesalers Association

There is a negotiation that takes place between the oil companies and the service station in terms of how they are going to roll out these incentives.

Avhapfani "Fani" Tshifularo, Executive Director - South African Petroleum Industry Association

He acknowledges they are not privy to the details of the different schemes and who benefits.

But ultimately the intended beneficiary is the users of petrol products as in all those schemes ou as the user of the fule will result in you no paying higher than that gazetted by the minister...it will reduce the burden of what you pay.

Avhapfani "Fani" Tshifularo, Executive Director - South African Petroleum Industry Association

But who bears the cost of that benefit to the consumer?

All the elements are pretty much fixed...so the people who can negotiate in terms of who gets a piece of this cake are the players themselves - the oil company and the service station operator.

Avhapfani "Fani" Tshifularo, Executive Director - South African Petroleum Industry Association

They can negotiate out of that fixed portion who will get what, he says.

In those negotiations, they are limited to the amount that will have been approved by the regulator.

Avhapfani "Fani" Tshifularo, Executive Director - South African Petroleum Industry Association

Listen to the discussion below:

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19 February 2020 10:26 AM
Tags:
Petrol prices
Petrol loyalty schemes

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