29/09/2000 19:54 - (SA) Diesel price to hit farmers Francois Williams Cape Town - The sharp increase in the diesel price will have a serious negative impact on especially crop farmers who will soon be using large amounts of diesel at the start of the summer planting season, Agri South Africa says.

The diesel price is to be increased by 37c a litre on Wednesday, the Department of Mineral and Energy Affairs announced officially on Friday, after saying initially on Thursday it expected the increase to be 36c a litre.

Besides the agricultural sector, the road transport industry will have to bear the worst direct effects of the sharp diesel price increase. Louwtjie Theron, the convener of the soon to be formed Association for Coal Transporters and Related Industries (Actri), said the sharp increase made it economically impossible for many transport contractors to survive, for example especially those who transport coal to Richards Bay. Actri represents about 80% of South Africa's coal transporters and will co-operate with the Mpumalanga legislator, the CSIR, the Trac tollroad company and hopefully later also the National Roads Agency on a partnership basis to regulate the transport industry better.

Dr Pierre Ranwell, an oil analyst of the broking group SocGen, said the sharp increase in the diesel price can be attributed partly to the difference between the supply levels at the coast and the up-country supplies, where most diesel is used. In addition, a month and a half ago the Brent and Dubai crude oil prices were at their highest level ever at $36 a barrel, and the effect of this is only now reaching the consumer.

The petrol price is going up by 6c a litre, not 5c as estimated on Thursday.

Paraffin is going up by 35c a litre. The average underrecoveries for petrol, diesel and paraffin were 5c, 36c and 34c respectively.

But an additional 1c a litre was added to each of the price increases to pay into the cumulative balance account. This is the account out of which oil companies are compensated for their loss when the fuel price is increased after they have fixed their prices for the month. The cumulative balance account for petrol was running a R629.433m deficit by August, diesel was at a R338.125m deficit, and paraffin at a R39.758m deficit.

The diesel price was still 192.1c a litre inland and 180.9c a litre at the coast in January last year. It has since risen by 84%. A year ago, the diesel price in Gauteng was 233.25c a litre and 222.05c a litre at the coast, but has since risen by 50.21%.

Agri SA deputy executive director Hans van der Merwe said the organisation is co-operating with Grain SA, the South African Revenue Service, the Departments of Mineral and Energy Affairs, of Finance and of Agriculture, as well as with representatives of oil companies to develop an acceptable system for the introduction of a reduction on agricultural diesel.

http://news.24.com/News24/Finance/Economy/0,1466,2-8-25_919712,00.html

-- Martin Thompson (mthom1927@aol.com), September 29, 2000