Pretoria - The strike that has left many petrol stations in Gauteng dry, may have a negative impact on the already cash-strapped Road Accident Fund, which gets a substantial portion of its income from the fuel levy.
The levy received during July was the lowest the fund had received in about eight months, leaving the funds cash flow in financial difficulties.
This impacted on all service providers, as well as beneficiaries, who in certain cases will have to wait even longer before receiving payment for their claims. At the end of July the RAF send a letter to all service providers in which it warned of an even bigger shortfall in its budget.
RAF spokeswoman Linda Rulashe said on that August 4 that 5262 service providers and claimants were owed R9.04 billion.
The July fuel levy receipt was the lowest since November 2015, bringing only R2.4 billion into the RAF’s coffers after the deduction of the diesel rebate of about R441 million.
The fuel levy generated for June amounted to R2.8 billion and in May it brought in R2.6 billion.
In a letter to its service providers, the RAF warned that the situation would have a negative impact on its cash flow forecast and payment plans for August.
The RAF receives R1.54 per litre of petrol sold and its funding model is based on the volume of petrol sold.
If this decreases, then the RAF’s income will also decrease.
“This will exacerbate the RAF’s already difficult financial position and erode any gains that have already been made to improve claims payments,” said Rulashe.
During the 2015/16 financial year the fund settled claims amounting to about R29 billion.
Unsustainable dispensation
Rulashe said that despite the crippling circumstances, hampered by the tough economic climate, the RAF still has to fulfil its mandate and compensate road accident victims.
The government has emphasised that it will not continue supporting an unsustainable dispensations such as the one administered by the RAF, whose unfunded liabilities stood at R145 billion at 30 June 2016.
Rulashe said policy change was no longer an option and the introduction of the Road Accident Benefit Scheme was even more pressing.
It would replace the present fault-based system that the RAF says is characterised by costly and prolonged litigation and high administration costs.
The RAF has strengthened existing cost containment measures implemented after finance minister Pravin Gordhan’s budget speech.
These include tightening claim settlements and reducing legal costs by improving litigation outcomes and aiming at having more claims directly instituted with the fund (side-stepping lawyers), which the RAF said already saved it R1 billion.
The RAF is aiming at streamlining its expenditure further by cutting administration costs and reviewing its organisational structure.
The fund is keeping its service providers updated on its cash flow situation and warning them when the belt has to be tightened, as the situation is this month.
“We will endeavour to ensure that everyone get some payments, but in a month like this it may be less than what they may have expected. Assets and funding are not sufficient to meet all our obligations,” said Rulashe.
Pretoria News
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