Petrol hikes can fuel SA renewables drive


Petrol pump

Executive Editor
JOHANNESBURG, (CAJ News) – THE incessant rise in fuel prices, a source of political tension and economic upheaval in South Africa, might be a blessing in disguise to the country’s renewable energy ambitions.

The latest hike has the price of petrol (unleaded 95, the highest priced) racing towards R25 a litre (US$1,55). At R24,17, it is slightly more than 80c way from that unenviable record.

Diesel (500ppm) is at R23,09.

Leon Steyn, Chief Executive Officer of Dante Deo, explained the rise in fuel prices was impacting supply chains and the retail sectors through the transportation and logistics categories.

“Fuel is a core input cost required by any organization and thus the rapid rise will have a short- and medium-term impact on margins as well as downstream and upstream inflation,” he said.

Dante Deo is a leader in information technology (IT) sourcing and procurement.

Electronic commerce has seen a boom due to lockdowns and customers resorting to online shopping.

“However, delivery models will need to be investigated and cost saving strategies formulated,” Steyn recommended in an interview with CAJ News Africa.

This sentiment is on the back of e-commerce not spared the impact of the fuel hike.

Steyn explained the increased cost of direct and indirect transportation will have to be passed on to clients from the courier companies.

“And those businesses will have no choice but to extend that to their customers; ultimately placing significant risk on the end consumer,” said Steyn.

And that is just the back end of the supply chain, the executive said.

As goods and services are consumed through the production processes, each part will have a small increment, up to the point where the retailer needs to pass that entire increase to the consumer, affecting the consumer’s disposable income.

Steyn said however, fuel as a commodity in the production process, in the context of South Africa’s energy crises, may impact supply chains even deeper than other global markets.

“Other countries have the ability to offset transportation, heating and electricity generation costs through the use of electricity generated at scale,” he said.

“South Africa cannot achieve this – load-shedding is almost a daily occurrence, the rail infrastructure has collapsed, and our core infrastructure is crumbling due to the lack of maintenance,” Steyn said.

There is a silver lining to the gloom.

“However, the high cost of fuel may yet hold some advantage,” Steyn argued.

“As long as fuel is cheap, nobody will invest in renewable energy,” he added.

“Thus, although the fuel price has a significant impact on each of us, it just might result in a better tomorrow for our children,” Steyn said.

Dante Deo has been collaborating with customers in the Heavy Industry sector to invest in Advanced Process Control and Preventative Maintenance Technologies.

This is poised to provide clients the advantage to produce more, cheaper price point and faster with less disruption.

“Although this does not necessarily directly affect the cost of fuel, it does give our customers the ability to absorb the cost and whether the storm,” Steyn said.

– CAJ News


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