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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.
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.
SAFETY AWARDS
FOR SILO DISTRICT
DEVELOPMENT
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.
“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.”