LAST NIGHTS massive fuel hike, represents a record increase in the price of petrol products. The immediate result say economists of Rand weakness, and taxation by central government. Hidden from public view and the narrative of biannual price hikes as the new normal, is the backstory involving the sale of South Africa’s strategic oil reserves, their supposed “rotation” and the ensuing fraud associated with the former Zuma administration.
The result has been a strange parallel story of massive profits being made by oil dealers and involving oil traders, whilst motorists get stumped at the pump, and without a coherent electric vehicle policy articulated by central government moving forward, one which might mitigate the future effects of oil price increases.
According to Bloomberg there is still money to be made in South Africa out of fuel, “there’s no place quite like Saldanha Bay. When prices slumped in 2014,” says Paul Burkhard “the trading houses generated outsize profits by storing millions of barrels of crude in the deep-water harbor north of Cape Town.”
The same article goes on to tout the commercial potential of the storage area which once housed South Africa strategic oil supply.
The Strategic Fuel Fund (SFF), first created by the apartheid government during sanctions, was meant to cushion the consumer against oil price spikes and dollar fluctuations. Instead, it has proved to be nothing more than a cash cow for close associates of Jacob Zuma and his family, in a corruption case known as Oilgate.
In May of 2016, there were revelations that former minister Tina Joemat-Pettersson “had sold off the Strategic Fuel Fund (SFF) reserves without the go-ahead of former finance minister Pravin Gordhan.”
The latest taxes may represent a claw-back strategy by treasury, but need to be seen in the contest of another corruption investigation involving the apparent allocation of oil-fields in the DRC and Nigeria, and open speculation surrounding the misappropriation of government funds, to the tune of R100bn and involving Khulubuse Zuma
All pointing to government involvement in a scam to move away from a strategic investment benefiting the economy and broader public, towards continued private manipulation of the fuel supply.
The result is an unavoidable increase of input costs across all sectors of the economy which can only harm growth. Weaning South Africans off the petrol habit, and moving towards tax incentives for the introduction of energy efficient electric vehicles, is a policy which is perhaps long overdue.
In this respect, the country is far behind the West.