00:00:02
Speaker 1: The Finance Minister in Okonongwana yesterday proposing a 10 billion rand fuel levy relief allocation as part of the medium-term budget policy statement saying that the financing is intended to help ease the cost of living pressures. without compromising the sustainability of the budget. The fuel levy will be reduced by 3 rand per litre for diesel as of the 4th of November and 1 rand 50 per litre for petrol on that day until the 1st of December 2026, he said. Joining me on the line is the Chief Executive of the Road Freight Association. That's Gavin Kelly. Gavin, a very good morning and welcome to the show.
00:00:53
Speaker 2: Morning Africa, good morning to all your listeners.
00:00:56
Speaker 1: I suppose this was welcome news from the finance minister yesterday for you, wasn't it?
00:01:03
Speaker 2: Africa, any cushioning of the fuel price, any relief added by the finance minister, yes, is very welcoming. And three rand a litre is a huge cushion. If one could think it might have gone up by that or it may still go up by that in November, that cushion is definitely going to help.
00:01:22
Speaker 1: Let's appreciate the kind of, I suppose, pressure the freight industry has been under since the beginning of the year. As a person who drives a car that is fueled by petrol, my petrol price per litre has gone up 50%. I was paying 20 rand a litre or thereabouts. In January, I'm now paying just over 30 rand a litre, depending on where I am in South Africa. You need diesel in order to drive those engines. across the country and beyond our borders. And the price of diesel has been under even more severe pressure, hasn't it?
00:01:57
Speaker 2: Yes, it has. So we've seen over the last couple of months, just this year alone, 73% increase in fuel. We've had a little bit of downs here and there, but generally that's what it's been over the medium term. That's a huge amount of pressure, especially where you might not be able to get all of that back from your customer. In other words, the person who's paying you to move their goods. And we have seen a fair amount of of stress. We've seen a number of companies closing, saying, well, we just can't do this. And you can imagine if we had another three or four-rand increase in November, we don't yet know what the price increase would be or would have been without the three-rand relief. So tremendous pressure, yes.
00:02:45
Speaker 1: And if there are companies that are shutting down because they're not able to pass on the additional pressure to their customer and therefore recoup that cost, that then places even more pressure on those who are able to sustain and to survive the pressures?
00:03:03
Speaker 2: Africa always thinks, well, if a business closes down, then I can grab that business and carry on. There are reasons just around the actual movement of the goods that could contribute to why it closed down. So it might not be a sustainable transport leg on its own, even before you bring in the price of fuel. So it has a ripple effect. We don't want to lose transporters, and quite often, it's not only, but quite often, they're the little guys, the guys who do subcontracting, and when they start falling out, we start to see a problem in terms of actually getting it all over the place in terms of making sure those legs that are operated by smaller companies are filled.
00:03:49
Speaker 1: So what is the way going forward, Gavin? We happen to be lucky enough to have this 10 billion rand maneuvering space for the finance minister, but it is temporary. The relief in the fuel levy will be for a month or two, and then we're going to need to go back to paying the full fuel. Obviously, a solution in the Middle East is way beyond our control. We don't have sufficient refining facilities capacity in South Africa, which means we need to import diesel that is refined and, and, and many of those factors outside of our control. But what do we need to do, do you think, going forward in helping to manage the pressures of the price of diesel for you and your industry?
00:04:35
Speaker 2: Well, it's a multifaceted question, Africa. Early in the morning, I need to drink four more cups of coffee to get all the answers to that one. The first thing that our industry is trying to do is trying to drop the amount of fuel consumed. So that's probably your first avenue to get your head through this tough time. And that can be a number of methods that you use. So you look at the time of day that you travel. You try to stay out of congested routes. So typically, we all know what it's like driving on various roads in the morning at certain peak hours. So you try to see whether you can't change the times that you actually move along certain routes. You try and make sure that where you go to pick up or offload that on those sides, both of those sides, that there aren't delays there because when the truck stands and it idles, it uses fuel. You've got to make sure that your vehicle is well-maintained both mechanically and that its tires and its wheels and its alignment are all in place so that you move smoothly. And then for those who've got the money, they start looking at far more efficient vehicles, whether that's going into electric style vehicles to try and move away from diesel type vehicles or trying to get vehicles that are newer, more modern and use less fuel. Not all of those are easy to do and a lot of them cost a lot of money. But long term, we have to find a way in South Africa that we can make ourselves independent of the sorts of pressures and demands of international fuel, international fuel prices. And there's some things there, as you quite rightly say, that are out of our control. We need to get the RAND to a better level against the dollar. You know, if we had one RAND to a dollar, then... a barrel of fuel would cost us 102 rand. It wouldn't be $ 102 times 16 or 18 rand. So there's that sort of maneuvering that needs to happen from the country, but definitely we have to make ourselves self-sufficient.
00:06:47
Speaker 1: Sure. How the country then makes itself more self-sufficient is the challenge, right? Because Cecil... produces, what, 15%, 20% of what our fuel needs are in this country, and therefore we will always be a net importer of fuel in this country, won't we?
00:07:08
Speaker 2: No, no. We will in the short term, yes. But if we as a country decided, well, we are going to get Sassol to produce, and I'm just putting some figures out there for some thought this morning while everyone eats their croissants, What if we turned around as a country and said we want to make ourselves totally independent, self-sufficient? So, Cecil, you're going to go from the 15 or 20. I think they're roughly around 20%. And you're going to do 100%. It sounds inconceivable. It sounds impossible. But it's not. And that's not going to happen next week. That's the problem. That might take five years. But if we really put our shoulders to the wheel, we've got all the coal that we need. It's our own coal. We could then push Cecil to produce, to zentiple its production, if you would. Can you imagine the jobs we would create? We've got a huge problem in the sugar industry where sugar has no longer... being used as taken out of soft drinks why don't we push the ethanol project we could probably within a five to ten year period i think maximum get to a stage where we could produce our own and then we haven't gone looking for shale oil and all those sorts of nice things so i don't think it's impossible africa i think it's just it's definitely not going to happen you know by next month.
00:08:32
Speaker 1: In the meantime, we all gird our loins, I imagine, Gavin, and try to survive it, don't we? Thank you very much for your time. where the price of petrol could rise by R1. 59 and R1. 52, depending on the grade of petrol you use, and that the price of diesel will go up by R1. 25 and R1. 24, once again dependent on the grade of diesel that you use. With this fuel relief, it certainly will come in handy from a diesel consumption point of view. Well, there will be a reduction in price now, most likely. and the increase in the price of petrol will be minuscule, $ 0. 09 or $ 0. 02 if the figures hold. But as you heard from EWN 20 minutes ago, unfortunately, Russia attacking Kiev, and that does place a bit of pressure, not as much as what happens in the Middle East, but certainly some pressure on the price of fuel.
Speaker 1: The Finance Minister in Okonongwana yesterday proposing a 10 billion rand fuel levy relief allocation as part of the medium-term budget policy statement saying that the financing is intended to help ease the cost of living pressures. without compromising the sustainability of the budget. The fuel levy will be reduced by 3 rand per litre for diesel as of the 4th of November and 1 rand 50 per litre for petrol on that day until the 1st of December 2026, he said. Joining me on the line is the Chief Executive of the Road Freight Association. That's Gavin Kelly. Gavin, a very good morning and welcome to the show.
00:00:53
Speaker 2: Morning Africa, good morning to all your listeners.
00:00:56
Speaker 1: I suppose this was welcome news from the finance minister yesterday for you, wasn't it?
00:01:03
Speaker 2: Africa, any cushioning of the fuel price, any relief added by the finance minister, yes, is very welcoming. And three rand a litre is a huge cushion. If one could think it might have gone up by that or it may still go up by that in November, that cushion is definitely going to help.
00:01:22
Speaker 1: Let's appreciate the kind of, I suppose, pressure the freight industry has been under since the beginning of the year. As a person who drives a car that is fueled by petrol, my petrol price per litre has gone up 50%. I was paying 20 rand a litre or thereabouts. In January, I'm now paying just over 30 rand a litre, depending on where I am in South Africa. You need diesel in order to drive those engines. across the country and beyond our borders. And the price of diesel has been under even more severe pressure, hasn't it?
00:01:57
Speaker 2: Yes, it has. So we've seen over the last couple of months, just this year alone, 73% increase in fuel. We've had a little bit of downs here and there, but generally that's what it's been over the medium term. That's a huge amount of pressure, especially where you might not be able to get all of that back from your customer. In other words, the person who's paying you to move their goods. And we have seen a fair amount of of stress. We've seen a number of companies closing, saying, well, we just can't do this. And you can imagine if we had another three or four-rand increase in November, we don't yet know what the price increase would be or would have been without the three-rand relief. So tremendous pressure, yes.
00:02:45
Speaker 1: And if there are companies that are shutting down because they're not able to pass on the additional pressure to their customer and therefore recoup that cost, that then places even more pressure on those who are able to sustain and to survive the pressures?
00:03:03
Speaker 2: Africa always thinks, well, if a business closes down, then I can grab that business and carry on. There are reasons just around the actual movement of the goods that could contribute to why it closed down. So it might not be a sustainable transport leg on its own, even before you bring in the price of fuel. So it has a ripple effect. We don't want to lose transporters, and quite often, it's not only, but quite often, they're the little guys, the guys who do subcontracting, and when they start falling out, we start to see a problem in terms of actually getting it all over the place in terms of making sure those legs that are operated by smaller companies are filled.
00:03:49
Speaker 1: So what is the way going forward, Gavin? We happen to be lucky enough to have this 10 billion rand maneuvering space for the finance minister, but it is temporary. The relief in the fuel levy will be for a month or two, and then we're going to need to go back to paying the full fuel. Obviously, a solution in the Middle East is way beyond our control. We don't have sufficient refining facilities capacity in South Africa, which means we need to import diesel that is refined and, and, and many of those factors outside of our control. But what do we need to do, do you think, going forward in helping to manage the pressures of the price of diesel for you and your industry?
00:04:35
Speaker 2: Well, it's a multifaceted question, Africa. Early in the morning, I need to drink four more cups of coffee to get all the answers to that one. The first thing that our industry is trying to do is trying to drop the amount of fuel consumed. So that's probably your first avenue to get your head through this tough time. And that can be a number of methods that you use. So you look at the time of day that you travel. You try to stay out of congested routes. So typically, we all know what it's like driving on various roads in the morning at certain peak hours. So you try to see whether you can't change the times that you actually move along certain routes. You try and make sure that where you go to pick up or offload that on those sides, both of those sides, that there aren't delays there because when the truck stands and it idles, it uses fuel. You've got to make sure that your vehicle is well-maintained both mechanically and that its tires and its wheels and its alignment are all in place so that you move smoothly. And then for those who've got the money, they start looking at far more efficient vehicles, whether that's going into electric style vehicles to try and move away from diesel type vehicles or trying to get vehicles that are newer, more modern and use less fuel. Not all of those are easy to do and a lot of them cost a lot of money. But long term, we have to find a way in South Africa that we can make ourselves independent of the sorts of pressures and demands of international fuel, international fuel prices. And there's some things there, as you quite rightly say, that are out of our control. We need to get the RAND to a better level against the dollar. You know, if we had one RAND to a dollar, then... a barrel of fuel would cost us 102 rand. It wouldn't be $ 102 times 16 or 18 rand. So there's that sort of maneuvering that needs to happen from the country, but definitely we have to make ourselves self-sufficient.
00:06:47
Speaker 1: Sure. How the country then makes itself more self-sufficient is the challenge, right? Because Cecil... produces, what, 15%, 20% of what our fuel needs are in this country, and therefore we will always be a net importer of fuel in this country, won't we?
00:07:08
Speaker 2: No, no. We will in the short term, yes. But if we as a country decided, well, we are going to get Sassol to produce, and I'm just putting some figures out there for some thought this morning while everyone eats their croissants, What if we turned around as a country and said we want to make ourselves totally independent, self-sufficient? So, Cecil, you're going to go from the 15 or 20. I think they're roughly around 20%. And you're going to do 100%. It sounds inconceivable. It sounds impossible. But it's not. And that's not going to happen next week. That's the problem. That might take five years. But if we really put our shoulders to the wheel, we've got all the coal that we need. It's our own coal. We could then push Cecil to produce, to zentiple its production, if you would. Can you imagine the jobs we would create? We've got a huge problem in the sugar industry where sugar has no longer... being used as taken out of soft drinks why don't we push the ethanol project we could probably within a five to ten year period i think maximum get to a stage where we could produce our own and then we haven't gone looking for shale oil and all those sorts of nice things so i don't think it's impossible africa i think it's just it's definitely not going to happen you know by next month.
00:08:32
Speaker 1: In the meantime, we all gird our loins, I imagine, Gavin, and try to survive it, don't we? Thank you very much for your time. where the price of petrol could rise by R1. 59 and R1. 52, depending on the grade of petrol you use, and that the price of diesel will go up by R1. 25 and R1. 24, once again dependent on the grade of diesel that you use. With this fuel relief, it certainly will come in handy from a diesel consumption point of view. Well, there will be a reduction in price now, most likely. and the increase in the price of petrol will be minuscule, $ 0. 09 or $ 0. 02 if the figures hold. But as you heard from EWN 20 minutes ago, unfortunately, Russia attacking Kiev, and that does place a bit of pressure, not as much as what happens in the Middle East, but certainly some pressure on the price of fuel.
