Here’s how the state can reduce fuel prices, says AA
Cheaper fuels will require a multi-faceted approach with the private sector’s help
There is no silver bullet to bringing down fuel prices, according to the Automobile Association (AA), and it will require a multi-faceted approach with the involvement of the private sector.
This is the view of the AA, which, on Wednesday, submitted a presentation to the parliamentary portfolio committee on mineral resources and energy on how to mitigate rising fuel costs in SA. It follows record high prices for fuel in SA that came into effect in April.
All calculations relating to the fuel price need to be audited to determine if they are still relevant and appropriate, said Willem Groenewald, CEO of the AA.
Apart from focusing on the fuel price itself, Groenewald said extensive research must be conducted into every element of the fuel value chain that contributes to the fuel price.
Among the AA’s key recommendations are the reduction of the cost of the Road Accident Fund (RAF) to motorists through its better management and governance, and possibly by privatising or semi-privatising the financially troubled fund.
Groenewald said the general fuel levy (GFL) and RAF levies contribute significantly to every litre of fuel sold, but that citizens don’t see tangible benefits from these taxes.
“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 RAF through fuel taxes but it is poorly managed and a drain on our country’s resources,” he said.
The AA said improved road safety would reduce demand on the RAF, in which the government can play a role by better policing, safer roads, and better pedestrian safety education in a country where road crashes cost the economy about R150bn annually. Groenewald also said there must be more focus on claims management, and on preventing the need for compensation in the first place.
“We are being taxed to pay victims of crashes but nothing is being done to prevent crashes. It’s the same with the GFL: money is being collected but there is little evidence of good governance in its allocation or utilisation. Citizens have rightly questioned why they should be paying so much when they don’t see the results of what they’re paying for,” he said.
The association also recommends investing in alternatives to the country’s reliance on fuel by providing safe and affordable public transport, and improving Transnet to alleviate reliance on road freight.
The AA said private-sector involvement in dealing with rising fuel costs has now become inevitable, and that it remains committed to working with the government in the interest of consumers.
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