Nelson Mandela Bay’s economy is taking a significant hit, losing about R50m a month with the city reclassified as an inland zone by mineral and petroleum resources minister Gwede Mantashe, leading to higher fuel prices than coastal areas.
This is according to Nelson Mandela Bay Business Chamber chief executive Denise van Huyssteen.
The ruling is related to an accident in June when a fuel tanker piloted by a ports official damaged a berth in the Port of Port Elizabeth.
The wholesale fuel companies which used to collect fuel from the Port Elizabeth Harbour tank farm gantry had to start trucking it in from East London and they applied to Mantashe to change the zoning to allow them to charge more to cover their increased transport costs.
The minerals and petroleum resources department, in response to the additional costs associated with transporting the fuel to the metro, then decided to implement revised transport tariffs in October and November for petrol, diesel and paraffin for Nelson Mandela Bay and surrounding areas.
This resulted in interim zone changes in the affected areas, to allow the industry hauliers to recover their fuel transportation costs.
“The chamber notes that this pricing structure is supposed to be temporary in nature, and once the fuel berth is repaired the area will return to its former allotted zone,” Van Huyssteen said.
“We, however, estimate that this decision is causing an irrecoverable direct loss to the local economy of about R50m a month.”
She said as an example, the October unleaded 95 petrol price decrease was supposed to have been 114 cents per litre, but due to the rezoning of Nelson Mandela Bay this price decrease was only 31c per litre, representing a loss of 83 cents per litre.
In November, the price of unleaded 95 petrol increased by 25 cents a litre, but due to the inland zoning this was increased by 83 cents a litre for consumers in Nelson Mandela Bay.
“Collectively this means that to date Nelson Mandela Bay consumers have paid R1.66 more per litre for 95 unleaded fuel vs what they would have paid if the area was still a coastal zone.
“In terms of diesel and paraffin, the collective additional amount paid by consumers is also R1.66 more per litre.”
In the interests of its members, consumers and communities, the chamber filed an urgent review application in October, to gain access to the information which informed the minister’s decision.
“From the records received it would appear that the minister did not consider any other options to mitigate the impact of the issue on consumers, but rather focused solutions on addressing the additional transport supply costs and the recovery thereof.
“Moreover, we remain concerned, that this potentially creates a precedent for the state to simply transfer its obligations to innocent parties without taking accountability and without regard to the right to administrative justice enshrined in our constitution.
“While we have achieved success in putting pressure on the minister, as well as Transnet to accelerate the repair of the berth at the Port Elizabeth Port and return the metro to being part of a coastal pricing zone, we are extremely disappointed that consumers and businesses continue to carry additional costs through the fuel price adjustments to fund this.
“It casts doubt that the berth, which is earmarked to be repaired by December 6, is on track and potentially may not achieve this deadline.
“This may mean the metro may not revert to its coastal zone pricing status ahead of the holiday season.
“As we are a nonprofit organisation and do not have the financial resources of the state, the chamber decided to reach a settlement with the minister, whereby through a court order it has been agreed that Nelson Mandela Bay will revert to being part of the coastal zone once the berth is operational again.
“The minister was not willing to make this change from early December or January when the fuel price adjustments take place, indicating the low confidence levels in the berth becoming operational timeously.”
She said the chamber was unhappy with the lack of commitment and ongoing approach of punishing Nelson Mandela Bay-based consumers and businesses for an issue which was not of their making.
“It is the chamber’s view that the additional costs incurred in transporting these fuels into the area by road have been unfairly passed on to businesses, consumers, commuters and local communities.
“It is of concern the minister did not adequately consider key regional indicators which reflect that Nelson Mandela Bay is in recession and has among the highest unemployment rates in the country.
“Of equal concern is that consumers and businesses are already reeling from the consequences of the huge municipal utility price increases and other factors affecting the cost of living as well as costs associated with operating businesses.”
Mineral resources and energy department spokesperson Makhosonke Buthelezi requested questions be sent via email.
However, he did not respond by the time of publication.
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