THE flooding in KwaZulu-Natal in KwaZulu-Natal had damaged supply and retail chains in the already hard-hit industry, fuel retail industry management consultancy PetroCONNECT said at the weekend.
The State of Disaster in the province has seen many local businesses and petrol stations destroyed, bringing their operations to a grinding halt.
The public, stirred by false social media messages has been panic buying fuel, leading to triple the daily average sales at some service stations thereby creating an even greater demand on the already restricted supply chain, the company said.
PetroCONNECT’s directors and co-founders, Sbonelo Mbatha and Mark Harper, in an interview with Business Report, said with the latest disaster it would take time to build up fuel retailers’ sales again in the already ailing economy.
PetroCONNECT said many fuel retailer sites were severely impacted by the floods as they had experienced structural damage to their facilities, especially, those in low lying areas.
“The repair work values will be quantified in the coming weeks, but this is estimated to be millions of rands to repair many of these sites. A significant amount of money has already been spent on pumping out water from the tanks underground, which is a technical job due to the flammable substances being worked with, they said.
“A lot of sites will continue to run on generators due to the electricity challenges leading to even greater costs to keep the sites running with many not able to sell essentials like electricity and airtime due to cellphone towers being affected and taking these services offline.”
However, PetroCONNECT said there had been some improvement in the past two days in terms of the logistical challenges facing the oil companies.
Bayhead Road, being the main arterial road in and out of the depots, was damaged badly during the recent floods, which was unusable and would take time for Transnet to fix.
“Transnet did issue communication that they are already working on the road and will do what they can to return it to normal soon. The challenge was then to get approval to use another road, which took more than a day to get from the authorities, leading to even further delays with service stations running dry all over the province. There has also been congestion at the gantry to further exacerbate the challenges,” the company said.
According to PetroCONNECT, which is owned by petrol station owners, an average service station took a delivery (tanker) of fuel every three days with busier sites taking a daily delivery in some cases. If one took into consideration that trucks were not able to get out for three days, this created a logistical challenge for the supply and retail chain to refill the sites with fuel.
“With the secondary road now being open, the supply challenges have been stabilising, but it will take some days to get the service stations back to a normal inventory holding with oil companies chasing their tails to get more fuel to their networks,” the firm said.
This comes at a time the fuel retailing industry is battling the long-term financial fallout of Covid-19 lockdowns.
Cash-strapped consumers bought less fuel leading to fuel volumes dropping by 80 percent in some cases, forcing many fuel station operators to plead for rental relief from landlords, and with no support from the government.
In December, the Fuel Retailers Association said the July 2021 riots and looting saw the sector losing more than R300 million in damages.
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