Jun 11, 2009 at 12:46 PM
Issued by: Dave Gray PR
Attention: Financial / News Editors
For immediate release:
11 June 2009
HIGH FAILURE RATE AMONG BEE PETROL STATION OWNERS THREATENS
TRANSFORMATION PROCESS
The fuel retail sector is over-traded by an estimated 30% a situation which creates a challenge for increased BEE participation within the context of the Petroleum and Liquid Fuels Empowerment Charter says Reggie Sibiya, CEO of the Fuel Retailers' Association.
BEE entrepreneurship programmes (in the sector) are not delivering and are incurring a greater than 50% failure rate (among BEE fuel retailers) as a result.
Speaking in Johannesburg today at the African Minerals and Energy Forum (AMEF) seminar attended by the Minister of Energy Ms Dipuo Peters, to review the Charter's progress, Sibiya said the down the line implications for the economy as a result of BEE deals within the context of the Charter were positive growth, better distribution of wealth according to the demographics of the land and a franchised and regulated economic sector.
However specific areas that needed to be addressed to meet the aims of the Charter by its November 2010 deadline included the effectiveness of regulation in the sector and enforcement of compliance with tangible incentives and penalties.
'Window dressing' and politicisation of the issue (where BEE scorecards were manipulated to be politically correct), had to be stopped and effective financing and training structures introduced.
"It's also necessary to bring heart to the transformation process in the sector by creating a supportive structure and attractive terms of credit for Historically Disadvantaged South African companies," he said.
Fuel retailing was beset by a regulated pricing structure with an unregulated cost structure. De-regulation would first hit the bottom end of the retail chain which is run by HDSAs at the moment.
De-regulation could therefore only come about when at least 60% of the network was in the hands of historically disadvantaged South Africans.
Beyond 2010 a managed liberalisation process was needed to elevate HDSA empowerment. There would have to be accelerated participation of HDSAs in the top 40% category of petrol retail sites which contributed 60% of the sectors business.
It was necessary to stop allocating abandoned sites to HDSAs and to re-examine structural contracts in the sector to ensure favourable tenure and credit for BEE enterprises.
Vertical integration which turned entrepreneurs into site managers had to be eliminated while local shareholders had to be more supportive of BEE.
Effective licensing had to be ensured in enforcing BEE participation, with government allocating more and effective resources in this process.
It would also be necessary to be more vigilant in the site changeover processes in promoting and enforcing BEE, an area where oil companies could help by seconding their administrative staff to the Department of Minerals and Energy (DME).
Access to both retailing rights and land ownership had to be ensured by the regulator and easy finance and credit terms were needed to eliminate financial entry barriers where typically at the moment, 40% start-up capital was needed. Banks were not really helping. Government and oil company funding was needed.
FOR FURTHER INFORMATION CONTACT
Reggie Sibiya
CEO
Fuel Retailers Association | 
the Pulse at the Pump
