On Thursday, South Africa’s three largest grocery merchants criticized the government for not providing a diesel tax rebate despite power shortages.
Notwithstanding power outages raising costs, they did this. Shoprite, Pick n Pay, and SPAR expressed their “great displeasure” with the government’s decision to extend the oil tax refund for food manufacturers but not food retailers in its Driving force Wednesday budget for the year.
The announcement followed the government’s decision to prolong the rebate for food makers but not retailers.
The Presidents stated that “The administration believes the energy crisis should not hurt the food industry. The government has completed half the job.”
We are absorbing as much of these costs as possible in this really tough moment to save money. We cannot continue forever.
Eskom, which has battled for years to satisfy South Africa’s electrical demands, is currently imposing its worst blackouts. Leaving homes without power for up to ten hours per day and bringing an end to activities.
Retailers are forced to use diesel generators for extended periods of time in order to power their massive stores. Resulting in additional costs and putting pressure on the margins of their businesses.
Chief executives have indicated that the operation of their backup generators costs them billions of rand in diesel. However, they have requested that the government reimburse merchants as well.
According to the most recent sales update, Shoprite, the largest supermarket in the country, spent $560 million rand ($31 million) on diesel in the six months that ended on January 1. Meanwhile Pick n Pay spends $60 million rand every month. Shoprite is the only supermarket chain in the country to spend more than $60 million rand on diesel every month.
In his announcement about the budget that he delivered on Wednesday, Finance Minister Enoch Godongwana indicated that he intends to include food producers in the gasoline tax credit in order to mitigate the impact of the energy crisis on food prices.
In the past, a tax credit could be claimed for each gallon of gasoline that was purchased to fuel a business’s generators; however, this credit was only available to mining and agricultural companies.
(1 $ = 18,2510 Rand)
