Grocery CEOs urge government to rethink diesel rebates

The country’s three largest grocery retailers joined forces to criticise the government on Thursday for not offering a tax rebate on diesel use as crippling power cuts increase their costs.

The CEOs of Shoprite, Pick n Pay and Spar said in a joint statement they were “very disappointed” government in its annual budget on Wednesday had extended a diesel levy refund to food manufacturers but not to food retailers.

“The government has accepted the logic that the food industry should not be penalised for the energy crisis, but has only done half the job,” the CEOs said.

“We are doing our best to absorb as much as possible of this cost rather than pass it on to the public at this most difficult time, but we cannot do so indefinitely.”

State-owned electricity utility Eskom, which has struggled for years to meet power demand, is implementing the worst rolling blackouts on record, leaving households in the dark for up to 10 hours a day and disrupting businesses.

Retailers are having to crank up diesel generators for hours to power their vast stores, additional costs that are putting pressure on their margins.

The CEOs said running their emergency generators was costing them billions in diesel and urged the government to extend the rebate to retailers.

The largest grocery retailer Shoprite spent R560m on diesel in the six months ended January 1, while Pick n Pay is spending R60m per month, according to their latest sales updates.

Finance minister Enoch Godongwana said in his budget speech on Wednesday he was including food manufacturers in the diesel tax rebate to ease the affect of the electricity crisis on food prices.

Previously only the mining and agriculture industries were eligible to a tax rebate on every litre of fuel they buy to keep generators running.