Drop petrol price by cutting fat

Issued by Gavin Davis MP – DA Shadow Minister of Energy
12 Sep 2018 in News

The below speech was delivered in Parliament today by DA Shadow Minister of Energy, Gavin Davis MP, during the debate on urgent matter of national public importance: Escalating fuel prices.

Speaker,

This is indeed a debate of urgent national importance. In fact, it is a crisis. The escalating global oil price and the weakening Rand have pushed the price of petrol to record highs.

This year, the petrol price has risen from R721 for a 50-litre tank to R804. That is an increase of R83 every time you fill up your car. Families are struggling to put bread on the table; they simply can’t afford to pay exorbitant fuel and energy costs.

The ANC will tell you this crisis is not of their making; that we are helpless victims of global events beyond our control. However, this is not true.

Yes, we have no control over OPEC and international oil prices. Yes, our currency has been buffeted by the global trade war that has dampened confidence in emerging markets.

But, the truth is that the ANC does have control over its policy choices and their impact on our currency. It is a fact that, on 31 July, when President Ramaphosa made a late-night television announcement on Expropriation without Compensation, the Rand plunged by 31c to the Dollar.

It is a fact that the election of state capture merchants like Ace Magashule as ANC Secretary General and David Mabuza as Deputy President quickly killed off the phenomenon known as ‘Ramaphoria’ and any green shoots of economic recovery.

It is a fact that proposed economic policies like the nationalisation of the reserve bank and the establishment of state banks do nothing to inspire economic confidence, and do everything to undermine it. It is a fact that the ANC government has been caught flat-footed by the recession and is unable to reassure investors that it has a plan for the economy.

This is why the Rand has fallen more steeply than other emerging market currencies, and why our fuel price is so high. I hope Minister Mokonyane understands now that when the rand falls, you can’t just pick it up.

Speaker, make no mistake, the high fuel price is a crisis of the ANC’s making.

Not only has the ANC government let the rand weaken by over 29% since President Ramaphosa’s election, it has slapped a R5.30 fuel levy on every litre of petrol. R1.93 goes to fund the corrupt, inefficient and useless Road Accident Fund, and R3.37 goes into the black hole that is our fiscus.

How is it that we are paying R5.30 on the fuel levy when, in Botswana, they pay just 40c? This is why the price of petrol in Botswana is just R11.51 per litre – a full R5.00 cheaper per litre than it is here.

Speaker, there is no question that the government must urgently reduce the fuel levy. The DA has a proposal to slash the fuel levy by 20% which would cut the cost of petrol by R1,06 for every litre. To fund this reduction, government would need to find around R 15.5 billion. This is tough, but not impossible.

Instead of spending billions on a bloated Cabinet full of incompetent Ministers and their VIP security, luxury cars and houses, we could use that money to cut the fuel price. Instead of using R59 billion to bail out Zombie parastatals we could sell them off and use the money to reduce fuel costs.

Instead of allowing Eskom push up electricity prices to pay off its escalating debt, we could unbundle Eskom and use some of the money to reduce the price of petrol.

There are many solutions we can come up with, and there are many solutions that the DA has put forward. But the core problem remains: this government has demonstrated zero political will to solve the fuel crisis.

On 14 August, Energy Minister, Jeff Radebe, was scheduled to meet with the Portfolio Committee to brief us on the fuel price. It was a huge embarrassment to his office and to this Parliament that he did not turn up and didn’t even bother to send a delegation.

The Chairperson of our Committee, the Honourable Majola, was correct when he called it a boycott. There was not much improvement the following week when Minister Radebe actually did arrive at the Portfolio Committee. Because he had nothing of substance to say, and could put no solutions on the table.

All he could say was that a Task Team had been set up between the Department of Energy and Treasury. When we asked Minister Radebe questions on the remit of the Task Team, he revealed that there had been no discussion at all about reducing the fuel levy. And so, we are left wondering exactly what is being discussed with Treasury, and whether there is any real commitment to reduce the price of petrol.

In a few weeks, this House will be debating the adjusted budget as part of the MTBPS process. Minister Radebe needs to work urgently with Minister Nene to find a sustainable way to cut the fuel levy in the adjusted budget.

The bottom line is that the ANC needs to find the political will to reduce fuel costs, stabilise the economy and make life better for every South African.

I thank you.