The Automobile Association (AA) has made representations to the Parliamentary Portfolio Committee on Mineral Resources and Energy on how to mitigate rising fuel costs in South Africa.
“Our view is clear that a comprehensive, long-term analysis of the components of the fuel price needs to be done as a matter of urgency, and that all calculations relating to the fuel price be audited to determine if they are still relevant and appropriate to South African conditions,” said Willem Groenewald, CEO of the AA.
Apart from focusing on the fuel price itself, Groenewald said extensive research must be conducted into every single element of the fuel value chain which contributes to the fuel price in South Africa.
Better alternatives must be sought if any elements are deemed too expensive, and each cent that is being charged must be justified.
Some of the key recommendations made to the Parliamentary Portfolio Committee to mitigate high fuel costs were made are:
• Investigation of current pricing model
• Recalculation and audit of existing elements within the pricing model
• Reduction the cost of the Road Accident Fund (RAF) to motorists and:
1 Better management and governance of the RAF
2 Improved road safety to reduce demand
3 Better policing
4 Safer roads, safer drivers, safer cars and better post-crash intervention
5 Better pedestrian safety education
6 Privatisation of the RAF, or at minimum semi-privatisation of claims management
Issues of good governance which impact the economy and R/USD exchange are highly pivotal to appropriate better utilisation and allocation of funds from the general fuel levy.
Current fuel methods must be changed for better alternative sources to make allowance in the:
1 Improvement of Transnet to alleviate reliance on road freight
2 Provision of safe, reliable, sustainable, affordable public transport
3 Provision of safe roads for non-motorised transport
“Our aim is to fight for the rights of consumers and if that means we have to take a step back and relook how we’re doing things then that’s what needs to happen. Continuing with a pricing model because it’s historically the one we’ve always used doesn’t make sense; we must ask if there is a better model available and, if there is, we should consider replacing our existing one,” Groenewald said.
Groenewald added that the general fuel and road accident fund levies contribute significantly to every litre of fuel sold, but that citizens do not see tangible benefits from these taxes.
“Currently R6.11 on every litre of fuel is taxed but there are several questions relating to the allocation and utilisation of these funds. For instance, we continue to fund the road accident fund through fuel taxes but it is poorly managed, and a drain on our country’s resources.
“Apart from poor management, have we fully explored alternatives to compensate victims of crashes, and, critically, has the private sector been consulted for their inputs?” Groenewald asked.
Another major issue is road safety and its associated costs. The government’s last estimate in 2015 was that road crashes cost the economy around R150 billion annually. But, Groenewald said there must be more of a focus on claims management, and on preventing the need for compensation in the first place.