The CEOs of South Africa’s three largest retail groups want the Road Accident Fund (RFA) diesel fuel levy refund that was granted to food producers in Thursday’s National Budget also extended to supermarkets.
Their plea was also supported by the Consumer Goods Council of South Africa (CGCSA), which said the rebate should also have included the retail and pharmaceutical sector, and the council intended to engage further with the National Treasury on the matter.
Pick n Pay CEO Pieter Boone, Spar CEO Mike Bosman and Shoprite Checkers CEO Pieter Engelbrecht said in a joint statement this week that they were “very disappointed” that yesterday’s budget extended the diesel fuel levy refund to food manufacturers but not to food retailers. Food retailers are spending billions of rand to fuel diesel generators through load shedding.
“The government has accepted the logic that the food industry should not be penalised for the energy crisis but has only done half the job. Our supermarkets are on the front line in keeping the lights on and the shelves and chillers stacked for customers during load shedding,” they said.
They said they were doing their best to absorb as much as possible of the cost of generating their own electricity rather than pass it on to the public at this most difficult time.
“But we cannot do so indefinitely. And we cannot do it without some cooperation from the government ,” they said.
Finance Minister Enoch Godongwana on Thursday said the government decided to extend a diesel fuel refund to manufacturers of foodstuffs for two years, from April 1, 2023, to March 31, 2025, as part of an effort to limit the impact of the energy crisis on food prices.
The diesel refund system already provides full or partial relief for the general fuel levy and the Road Accident Fund (RAF) levy to primary sectors and was implemented in 2000. The refund system is currently only applicable to the farming, forestry, fishing and mining sectors.
The CGCSA said they were, furthermore, disappointed with the missed opportunity by the government to provide relief for the whole food and medicine value chain through general fuel levy rebates. The association will engage with National Treasury to understand their rationale for not including the retailer and pharmaceutical sector.
Tiger Brands, one of the biggest food producers in the country, said it was studying the details of the proposals on the diesel fuel rebate.
“All Tiger Brands manufacturing plants are geared to respond to load shedding. To date, Tiger Brands has been shielded to a large extent from any substantial impact of load shedding on business continuity due to the significant investment made in prior years to secure backup generating capacity.”
It said, however, that the costs of operating in the current unpredictable and suboptimal environment were significant.
“The incremental cost of electricity generation using backup generators between October 2022 and January 2023 was R27 million,” it said.
“We have developed contingency plans for Stages 6-8, which will require a further capital investment of around R120 million for additional generating capacity. The bulk of this investment will be on increasing diesel and water storage capacity to mitigate the adverse impact of load-shedding at Stages 6-8 on municipal water supply,” the group said.
In 2022, approval was granted for the installation of solar generating capacity at four of Tigers’ manufacturing plants through Power Purchase Agreements with Independent Power Producers.
Solar power generation at the Home and Personal Care facility was commissioned in December 2022, with the remainder of the projects on track for mid-April 2023. A further rollout is planned in the second half of the company’s financial year 2023, the group said.
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