Copy
If you want to receive this newsletter, sign up HERE
View this email in your browser
CRITICAL INFORMATION: Retail Margin & Wage Increase
FUELSTREAM Newsletter - Best Practice Newsletter

FUELSTREAM Newsletter Nr 41

  • DEPT of ENERGY: Retail Margin Increase
  • DIESEL: Margin Increase
  • MIBCO: Wage Increase

Click HERE to access more informaiton about our services and to view the Safety & Security videos
Note: this information has been taken from the press release available on the cefgroup.co.za website.

Click on Petrol Price and then on the latest press release date.

The information below may change once more detail is made available.

Retail Margin Increase

Herewith an excerpt from the press release for the price adjustment - 7th December 2016:

IMPLEMENTATION OF REGULATORY ACCOUNTS SYSTEM MARGINS ON PETROL AND ADJUSTMENTS TO DIESEL AND IP MARGINS:
  • The Minister of Energy has approved the implementation of the Regulatory Accounts System margins with an adjustment of 15.2 c/l on petrol and a 5.96 c/l adjustment to margins applicable in the wholesale list price structures of diesel and IP with effect from 07 December 2016. The new margins are reflected in Annexure 1 (Paragraph 14).
ANNUAL WAGES INCREASE FOR FORECOURT STAFF:
  • The Minister of Energy has approved an increase in the retail margin of petrol of 4.9 c/l to cater for the salary increase of 10% for pump attendants and 7.5% for cashiers and other administration staff in line with the Motor Industry Bargaining Council (MIBCO) agreement. This money must be ring-fenced for the wages of the forecourt attendants.
The individual price changes are indicated as follows:
Product:
  • Both Grades of Petrol 93 & 95 (ULP & LRP) 20.000 cents per litre decrease in retail price
  • Diesel 0.05% Sulphur 32.040 cents per litre decrease in wholesale price
  • Diesel 0.005% Sulphur 31.040 cents per litre decrease in wholesale price
  • Illuminating Paraffin (Wholesale) 28.040 cents per litre decrease in wholesale price
  • Illuminating Paraffin (SMNRP) 38.000 cents per litre decrease in the Single Maximum National Retail price (SMNRP)
  • Maximum Retail Price for LPGAS 17.000 cents per kilogram decrease in the maximum retail price
Note the table below indicating the price adjustments for Petrol, Diesel and IP:

Keep the following in mind:
  • 9.8 cents per litre is allocated to the retail margin and the split for this portion is subject to the agreement between Dealers and each Oil Company. Note: the 9.8cpl includes CAPEX and OPEX and the split should be confirmed.
  • 4.9 cents per litre is allocated to the increase for wages and is ring-fenced
  • The previous full retail margin was 161.7 cents per litre
  • The new full retail margin is 161.7 (previous) + 9.8 (retail) + 4.9 (wages) = 176.4 cents per litre
  • Your oil company should provide you with an updated RAS schedule indicating the investor recovery portion
  • Your pump price adjustment must happen as normal, just like any other month
  • You must add your retail margin to your current Diesel margin, if you want to take this opportunity to also increase your Diesel margin (see additional notes below)
  • The margin adjustment includes a margin increase to off-set the wage increase, which is applicable from the day of the pump price adjustment
  • Wages are payable according to the new minimum wage schedule, which is not available yet (see additional notes below)
VIDEOS: Safety & Security
You can now access the Safety & Security videos directly from our website at https://sssmsa.com/. You will also see a few handy "Video Playlists" where we've grouped similar videos together.
Feel free to use these videos in staff training at site, but remember to discuss the implications with your staff and what you are doing on site to reduce Safety & Security incidents and accidents.

Diesel Margin Increase

The full retail margin is applied to petrol automatically by the Department of Energy and the pump price stipulated for 7th December 2016 already includes the adjusted margin..

This is NOT the case for Diesel. You determine your retail margin on Diesel and it is up to the Dealer at each site to make this adjustment.

Here is an example based on the previous retail margin:
  • EXAMPLE: You could set your Diesel price to give R1.62 in margin. You have decided to maintain this margin every month. That means at a wholesale price of R10.00 on Diesel 50ppm your pump price will be R11.62
  • EXAMPLE: The DoE announce that a 4.9 cpl increase in retail margin is approved for the next price adjustment. The 4.9cpl is automatically included in the Petrol margin, but not Diesel. During the next price adjustment the Diesel 50ppm wholesale price is set to decrease by 25cpl
  • EXAMPLE: This means the following:
    • If you decrease your pump price by 25cpl then you will still maintain a R1.62 margin
    • If you then increase your pump price with 4.9cpl you will get the benefit of the increased retail margin
    • That means, if you want the benefit of the increased margin you should only decrease your pump price on Diesel 50ppm by 20.1cpl (that is calculated as the normal price adjustment -25cpl plus the margin increase of 4.9cpl)
    • This is no different to increasing your margin in any other month - you are within your right to increase or decrease your margin on Diesel on any day in any month
Note: this is only to address the margin for wages (4.9cpl) on Diesel, if you want to increase your Diesel margin with the same amount as Petrol, then there is an additional retail margin (9.8cpl).

The new retail margin is 176.4 cents per litre, you can therefore adjust your Diesel margin depending on the margin you wish to make.

We've created a simple survey to get some feedback on how Dealers are managing margins on Diesel. Please click on the link and give us your feedback (note: you can do so anonymously). We will publish the results in the next edition - CLICK HERE

Wage Increase

The amended minimum wage schedule was not available at the time this newsletter was published.

However, the following is an excerpt from the press release:

ANNUAL WAGES INCREASE FOR FORECOURT STAFF:
  • The Minister of Energy has approved an increase in the retail margin of petrol of 4.9 c/l to cater for the salary increase of 10% for pump attendants and 7.5% for cashiers and other administration staff in line with the Motor Industry Bargaining Council (MIBCO) agreement. This money must be ring-fenced for the wages of the forecourt attendants.

You can keep the following in mind:
  • Wage increases must be given for all employees falling under MIBCO
  • None of those employees can earn less than the minimum wage
  • The retail margin increase on petrol (and on Diesel if you add it) includes provision for the wage increases. However this is only intended to cover the increase for forecourt attendants, forecourt cashiers and other administration staff.
  • To cover the wage increases for other staff e.g. merchandisers, food handlers, car wash attendants, etc. you will need to generate additional margin somewhere else e.g. convenience store, food offer, car wash, etc
Are you considering a change to your Accounting, Payroll & Management Reports? Not happy with what your bookkeeper is giving you?

We focus exclusively on the fuel industry and can assist you with a comprehensive service. If you are interested, give us a call (speak to Zelna, Jeanny-Lee or Ruan) or drop us an email by clicking
HERE
We always try to keep the information in this newsletter as accurate as possible. If you spot any errors or omissions please don't hesitate to let us know at rschoeman@future-ent.com
Futurent Consulting - Making a difference
CONTACT US
+27 (12) 804 5066
www.futurent.com 
www.sssmsa.com

This is a best practice newsletter for the fuel industry.
We share ideas with Dealers, Oil Company personnel and anyone else interested in the fuel industry.
Copyright © 2016 FUTURENT, All rights reserved.


Want to change how you receive these emails?
Click to subscribe
You can update your preferences or unsubscribe from this list