COVID-19: Fuel Industry: The plight of fuel retailers

COVID-19

FUEL INDUSTRY

THE PLIGHT OF FUEL RETAILERS

On 13 April 2020, after becoming aware of unique challenges facing the Retail Fuel Industry during the Covid-19 lockdown, NEASA undertook a survey among fuel retailers in order to determine what their particular problems are and how these problems could be addressed.

The overwhelming responses received identified four key issues which negatively affect the ability of fuel retailers to survive the current trading conditions:

• The largest threat to the survival of fuel retailers is the drastic decrease in turnover/sales brought about by the state of lockdown. Sixty percent of respondents cited this as the biggest problem they are faced with. During this lockdown, there is, obviously, nothing that can be done in order to increase turnover as motorists are locked in and only emergency and essential services vehicles may currently travel. Furthermore, as a result of the more expensive fuel in their tanks when the price of fuel dropped, fuel retailers are experiencing severe losses.
• All of this culminates in a cash-flow crisis as costs remain largely fixed, while there is a substantial decrease in income. As an essential service, filling stations have to remain open, normally 24/7, leading to sustained costs, with virtually no income. Fifteen percent of respondents cited the lack of cash-flow as a major impediment as the survival of the Industry is largely dependent on cash-flow.
• A significant number of respondents (10%) indicated that they will experience difficulty in paying rent during the period of lockdown.
• Despite most fuel retailers having introduced skeleton staff or short time, 15% of responders indicated that they are not in a position to fund remuneration.

In analysing the above, it is clear that relief to fuel retailers is primarily in the hands of the major oil companies. In this scenario the fuel retailers have very limited, if any, negotiating power.

An urgent appeal is therefore directed at the oil companies to assist fuel retailers in practical ways in order to survive the current adverse trading conditions.

NEASA 24/7 NATIONAL HOTLINE: 086 016 3272
legalhotline@neasa.co.za

Regards

We are all in this together.

Privileged and challenged to be South African.