Picture: REUTERS
Picture: REUTERS

Deregulation of the fuel price would lead to 50,000 job losses and would not necessarily result in lower prices, department of energy deputy director-general Tseliso Maqubela told MPs on Tuesday.

Energy minister Jeff Radebe and top officials from his department briefed MPs on how the fuel price is set and what could be done to lower it.

The fuel price is regulated by the energy department and adjusted monthly according to market conditions, including the price of crude oil and the rand-dollar exchange rate.

Apart from the price of crude oil, the determination also includes: margins for wholesalers, retailers and for storage and distribution, the fuel levy, the Road Accident Fund levy, customs and excise duties, and several other small additions.

The retail margin, which is mostly used to pay wages of petrol pump assistants, is at present 187c of the total R16 a litre price.

"If you deregulate, owners could opt for self-service and we would lose those 50,000 jobs overnight. From where we stand we don’t think that is a sustainable position. There is also no guarantee that the price would come down," he said.

Maqubela said the absence of sufficient infrastructure for wholesalers and retailers to compete would be a major obstacle.

"There is one pipeline; there is one single buoy mooring (to offload crude oil). If each company was to bring its own crude in its own tanker that could result in higher prices," he said.

The meeting is ongoing, with MPs posing questions to Radebe and officials.