Construction World February 2016

margin that distributors are allowed to add to the wholesale price. This currently stands at 64 c/ℓ. The next is the dealer margin, which currently stands at 155 c/ℓ. These margins are adjusted annually and approved by the Minister of Energy. It may seem unfair, at face value, that wholesalers and retailers are entitled to add a total of R2,19 per litre to the price of fuel for their ‘gain’. Nkadimeng stresses that these margins are in fact extremely low, and there is very little room for negotiations. “It is important to bear in mind that these margins do not go straight into the pockets of whole- salers and retailers.” Nkadimeng highlights the fact that a large percentage of these funds are redirected to overhead costs, such as staff wages, transportation, infrastructure and rent, to name a few. “Depending on efficiency, whole- salers realistically only make between 15c and 25c per litre after costs, while retailers make between 30c and 35c per litre after costs.” Margins Nkadimeng states that there is a perception that oil and gas industry representatives live the life of ‘oil-barons’, and that the industry is making excessively high profits at the expense of the consumer. “In stark contrast, the reality is that it is an extremely low-margin, turnover-based industry. Investment is also onerous, for example, a service station selling 200 000 litres per month requires about R2,5-million in facilities – which is signifi- cant for small players.” Government and industry representatives meet every quarter to discuss supply and demand trends, in order to ensure sufficient stock levels, in addition to providing forecast fuel prices on request. Despite this, Nkadimeng admits that fuel pricing structures should be more trans- parent, in order to allow the public to better plan their budgets in relation to the costs at the pump. “Most people learn the newly-adjusted price of petrol a few days before the Department of Energy makes the official announcement. In my opinion, more focus should be placed on the predicted future pump price of petrol from various news outlets – which regularly give the price and gold and crude oil, but the indicative price of petrol is far more important to the average South African.” Looking ahead, Nkadimeng indicates that Afric Oil is moving from its current business-to-business (B2B) model, towards a business-to-con- sumer (B2C) approach. “We are currently in the process of creating a long term strategy to enter into the retail side of the fuel business, by establishing up to 20 service stations across South Africa, Zambia and Zimbabwe by 2017,” he concludes. “Depending on efficiency, wholesalers realistically only make between 15c and 25c per litre after costs, while retailers make between 30c and 35c per litre after costs.”

SAFETY AWARDS FOR SILO DISTRICT DEVELOPMENT

5

Audited by the Master Builders Association (MBA), the V&A Waterfront’s Grain Silo project, comprising the much-anticipated Zeitz Museum of Contemporary Art Africa (Zeitz MOCAA) and The Silo (hotel), came first regionally and second nationally in the MBA Safety Competition. Phase II of the Car Park Redevelopment in the district also took home a regional first-place prize and second-place national prize, while No. 5 Silo came second in the regional safety awards. Rounding up the accolades, the Silo District development was named Safety Company and Safety Team of the Year at this year’s awards. The final phase of the V&A Waterfront’s Silo district is on track for an early 2017 completion at a substantial investment of R1,5-billion. This will bring the total investment by V&AWaterfront shareholders, Growthpoint and the Government Employee Pension Fund, managed by the Public Investment Corporation (PIC), to over R2,5-billion. Four new developments will introduce over 35 000 m² of mixed use, sustainable developments including new corporate offices, a residen- tial development, a Virgin Active Classic Health Club and a mid-range internationally branded hotel, plus over 1 050 additional parking bays. When completed, approximately 2 500 people will work at the Silo District daily. In an economic impact study released earlier this year, the expected nominal contribution to GDP from future developments is R29,9-billion. Construction at theV&AWaterfront’s SiloDistrict reached some impressive milestones in recent weeks: 2 500 000 man hours without a loss of time incident (LTI), and four construction safety awards for the work underway in the district. >

Afric Oil CEO, Tseke Nkadimeng.

CONSTRUCTION WORLD FEBRUARY 2016