The CEOs of Pick n Pay, Spar and Shoprite have put out an unprecedented statement criticising the decision to offer a tax rebate on diesel use only to food manufacturers, and asked that it urgently be extended to retailers.
It is almost unheard of for CEOs of rival firms to put out a joint statement, but the statement was signed by Pick n Pay CEO Pieter Boone, Shoprite CEO Pieter Engelbrecht and Spar acting group CEO Mike Bosman.
On Wednesday, in the national budget speech, finance minister Enoch Godongwana announced that food manufacturers will be able to claim back R2.18 for every litre of diesel used in food production. This will start in April, but a system to claim the rebate still needs to be developed.
But retailers who spend billions to keep food cold were excluded from this. The retail CEOs said in the statement: “We urgently ask government to look again and extend the refund to retailers.”
Almost R6 of the diesel price goes to specific taxes related to the use of roads. The general fuel levy is equal to R3.70 for diesel and the Road Accident Fund (RAF) levy, which funds insurance, is R2.18.
The statement said: “As the CEOs of SA’s three largest food and grocery retailers, we were very disappointed that yesterday’s budget extended the diesel fuel levy refund to food manufacturers, but not to food retailers”.
Pick n Pay is spending R60m on diesel a month, amounting to an average of R720m a year, according to a recent trading update.
Shoprite will spend R1bn a year at the current rates of usage, cutting into profits.
“Our supermarkets are on the front line in keeping the lights on, and the shelves and chillers stacked for customers during load-shedding.
“It is costing us billions of rand in diesel to fuel our emergency generators,” the letter said.
“We are doing our best to absorb as much as possible of this cost, rather than pass it on to the public at this most difficult time. But we cannot do so indefinitely.”
The letter warned of price increases, saying retailers could not absorb diesel costs “without some co-operation from government”.
The government has accepted the logic that the food industry should not be penalised for the energy crisis, but has done only half the job, it said.
The Consumer Goods Council of SA, which represents retailers and producers of household goods, had asked in an open letter written to the president that companies involved in food production and the sale of food be exempt from paying the RAF and general fuel levy when using diesel to power generators. The letter, written earlier this month, warned of threats to food security and the supply of medicines.
The council said on Thursday it was “disappointed on the missed opportunity by the minister to provide relief for whole food and medicine value chains through general fuel levy rebates”.
It welcomed the R2.18 rebate for food manufacturers, but had hoped for it to be extended to retail and pharmaceutical stores to ensure prices of food did not become “exorbitant” due to the cost of running generators.
“The association will engage with the Treasury to understand their rationale of not including the retailer and pharmaceutical sector,” the council said.
Tiger Brands, SA’s biggest food producer and owner of Jungle Oats, Beacon, Koo and All Gold brands, said a single day of load-shedding at stage 6 costs it R1.5m. It is now able to apply for the rebate.
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