My two cents in the fuel can
KING OF THE COAST WRITES:
The threat by the Fuel and Franchise Association to close retail fuel stations for seven days if they do not get an increase in their fuel markups, should be condemned in the strongest possible terms.
If the service station owners are supposedly drowning in debt, why are there so many of them and applications to open more can be seen constantly in the press. There are at least three times more than required for the number of vehicles in Namibia.
Secondly, why are they protected from competition amongst each other, when the vast majority of business owners, especially in the retail trade is not. Perhaps the Competition Commission can answer that question?
Why do they think that they deserve special treatment? You obviously don’t care that thousands of Namibians lost their businesses and jobs during the Covid lockdowns.
A common practice among these fuel stations is, that when a price increase is changed overnight, all the fuel in their tanks that is remaining and has been paid for by them at the previous price, is increased to the new price, so in effect they would be making the N$1.13 markup plus the increase. Which lately, could mean nearly N$3.00 profit on that fuel. They will argue that they lose out similarly when the price is decreased, but you can be sure they will run their tanks as dry as possible to avoid the loss.
The price of the food and other items sold in their adjoining shop is also far higher than the prices in non-fuel station shops.
The capital amount required to fill a typical service tank is considerable and does require financing. But here’s an idea which could solve that problem.
Seeing that 95% of filling stations are owned by the fuel companies who supply the fuel, whether that fuel is sitting in their tanks at their depots or is in the tanks of the filling stations that belong to them, it is still their fuel, in their possession.
So, change the system so that the fuel ownership changes as it is dispensed into the vehicle that is buying it. It is a simple IT arrangement that the next day or two the fuel station operator gets an invoice from the fuel supplier and pays over the money for the fuel sold that day. Even arrange with the bank that the amount owed gets automatically credited to the fuel supplier (similar to a debit order). These systems will allow the operator to not have to have large amounts of capital available to purchase the fuel upfront and could actually then reduce the markup and end up with the same net profit. Also, the price increases would be so much fairer to the public.
Perhaps the Association should tackle the government regarding Namcor’s entry into the retail market. What kind of government competes with its own citizens, with business paying their taxes? What kind of crony capitalism is that?
If you think that kind of behaviour is going to produce entrepreneurs who can grow the economy and create jobs, then you are surely living in cloud cuckoo land. And it’s not only Namcor, the Defence Force August 26 company is now also running a courier company amongst others.
The threat by the Fuel and Franchise Association to close retail fuel stations for seven days if they do not get an increase in their fuel markups, should be condemned in the strongest possible terms.
If the service station owners are supposedly drowning in debt, why are there so many of them and applications to open more can be seen constantly in the press. There are at least three times more than required for the number of vehicles in Namibia.
Secondly, why are they protected from competition amongst each other, when the vast majority of business owners, especially in the retail trade is not. Perhaps the Competition Commission can answer that question?
Why do they think that they deserve special treatment? You obviously don’t care that thousands of Namibians lost their businesses and jobs during the Covid lockdowns.
A common practice among these fuel stations is, that when a price increase is changed overnight, all the fuel in their tanks that is remaining and has been paid for by them at the previous price, is increased to the new price, so in effect they would be making the N$1.13 markup plus the increase. Which lately, could mean nearly N$3.00 profit on that fuel. They will argue that they lose out similarly when the price is decreased, but you can be sure they will run their tanks as dry as possible to avoid the loss.
The price of the food and other items sold in their adjoining shop is also far higher than the prices in non-fuel station shops.
The capital amount required to fill a typical service tank is considerable and does require financing. But here’s an idea which could solve that problem.
Seeing that 95% of filling stations are owned by the fuel companies who supply the fuel, whether that fuel is sitting in their tanks at their depots or is in the tanks of the filling stations that belong to them, it is still their fuel, in their possession.
So, change the system so that the fuel ownership changes as it is dispensed into the vehicle that is buying it. It is a simple IT arrangement that the next day or two the fuel station operator gets an invoice from the fuel supplier and pays over the money for the fuel sold that day. Even arrange with the bank that the amount owed gets automatically credited to the fuel supplier (similar to a debit order). These systems will allow the operator to not have to have large amounts of capital available to purchase the fuel upfront and could actually then reduce the markup and end up with the same net profit. Also, the price increases would be so much fairer to the public.
Perhaps the Association should tackle the government regarding Namcor’s entry into the retail market. What kind of government competes with its own citizens, with business paying their taxes? What kind of crony capitalism is that?
If you think that kind of behaviour is going to produce entrepreneurs who can grow the economy and create jobs, then you are surely living in cloud cuckoo land. And it’s not only Namcor, the Defence Force August 26 company is now also running a courier company amongst others.
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