Fuel prices: Pressure piles, as arrears to suppliers near P1bn
Mbongeni Mguni | Friday January 19, 2018 17:47
BusinessWeek has established that cumulatively, the country’s oil companies have not been paid in more than nine months and have been forced to hunt for, often, expensive avenues to shore up their operating capital.
The National Petroleum Fund (NPF), which collects levies from motorists and is supposed to pay retailers, is reportedly on its knees; a situation industry analysts say has been worsened by the Fund’s highly publicised legal troubles.
This week, several highly placed industry authorities said despite increases averaging 22.5 thebe in March, 20 thebe in November and 30 thebe in December, pump prices were currently about P2 below par.
The insiders said the industry had been in a state of under-recovery – where pump prices are below actual prices – since the beginning of 2017.
“Most of the suppliers are owed amounts averaging P200 million each and this is cumulative for the period of under-recovery,” a director with one of the companies confided to BusinessWeek.
“For the top three companies, Puma, Vivo and Engen, the figure is even higher. Companies have been forced to dig into their reserves for operating capital and this has really impacted on everyone.”
The country’s oil companies include Puma Energy, Vivo Energy, Engen Botswana and Caltex. Executives within the oil companies are reportedly following the legal case over the NPF with keen eyes, as many believe the suspect transactions involving P250 million, contributed to the depletion of the Fund.
“That money could have helped a lot. At the moment, government has very few options. It’s either they find that money from somewhere else and raise fuel prices. They cannot simply wait for crude oil prices to fall and in fact, the forecast is for prices to rise this year.”
Other industry experts said meetings with the Department of Energy Affairs over the matter were yet to yield concrete results.
“No one is saying we won’t be paid. In fact, they assure us in every meeting that we will be paid, but nothing happens on the ground,” industry sources said.
Botswana Energy Regulatory Authority chief executive officer, Rose Seretse told BusinessWeek yesterday that discussions were ongoing with the oil industry on the outstanding debt. “Indeed, there are some ongoing discussions with the local oil industry pertaining to the criticality of the need for settlement of the debt,” she said.
“There are also some further discussions geared towards coming up with some robust measures that could help avoid recurrence of such.
“These include amongst others, the clearance of the current outstanding cumulative price slate under-recovery.”
The other measures, she said, include the adoption of immediate price adjustments based on the prevailing monthly price slate under/over recoveries. This approach, already used in South Africa, eliminates the build-up of arrears to oil companies.
Fuel prices in South Africa dropped in January, due to the rand strengthening against the dollar. That country’s Automobile Association has projected prices will fall further in February. South Africa’s fuel prices are adjusted on the first Wednesday of every month.