DON’T DARE TOUCH OUR PROFIT MARGINS - FUEL RETAILERS

MBABANE – A cold war is brewing between the Ministry of Natural Resources and Energy and the Swaziland Fuel Retailers Association.
This is over the ministry’s proposal, a model that would eat up into the profit margins of fuel retailers.

Until recently, retailers were making up to 93 cents per litre of fuel but following the ministry’s proposal, they are anticipated to yield a profit margin of 51 cents per litre.
According to the retailers, if this proposal goes through it would result in most filling stations retrenching staff. 

The petroleum industry is estimated to employ over 4 000 people with some being on full-time employment while others are casual workers and if the proposal were to go through, 60 per cent would end without jobs.
Affirming looming retrenchments was Nurane Calu, who said his two fuel filling stations employed about 50 people with some on permanent basis while others were on contracts.

Development

With this impending development in the fuel industry, Calu said ‘doom’ was spelt out for his human resource. 
He noted that not only his employees were to be affected but their families as well given the spiral effect of the economy, should the proposed drop in profits be implemented.
“They feed their families with the money they earn and if this comes to effect, I’ll have to minimise their hours and relieve some of them as we can go under (the business will not do well).”
While some retailers said the proposal did not make sense, Calu opined that the proposed increment was just too much to bear.

The vocal entrepreneur noted that this was ludicrous as they (business community) could not meddle with the salaries of their employees no matter what new formula has been discovered.
With that assertion, he wondered what had caused government to propose such.
“They are meddling with our finances and in my understanding you don’t minimise one’s remuneration; but, you rather let it stay put if you can’t afford to increase due to unforeseen circumstances. So, why are they touching our resources?”

The businessman said if the turnover increased, expenses also increased due to merchant service, cash handling and other turnover related costs.

Impacted

Calu said this in turn impacted on profitability.
Explaining further, he said fuel retail specifically was a highly specialised sector, with operating margins that are affected by a multitude of factors such as oil prices, labour costs, exchange rates and regulations, to mention a few.
“Fuel sales remain the primary income of a business, accounting for approximately 80 per cent to 90 per cent of an operation’s turnover. Depending on the location, it usually delivers greater profit than alternative profit opportunities, for instance, a convenience store, carwash and quick service restaurant.”

Another fuel retailer, Itallo Dlamini said nothing formal had been reported to them but he had picked it up from casual engagements with other entrepreneurs.
Phil Mnisi noted that they had been engaged by the ministry on the proposed introduction of a new model for the calculation of profit margins.  
He said the model was said to have been developed following consultations with the University of Stellenbosch, in South Africa and other fuel retailers in that republic.
Interfere

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