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Speaker 1: Join the conversation of the conversation you with Capital.

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Speaker 2: Well, it's been fifteen hours and twenty three minutes since

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Speaker 2: the new prices of fuel were effected. The government putting

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Speaker 2: in place some measures to mitigate against the price hike

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Speaker 2: by saving us from implementing the full fuel levy, they

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Speaker 2: have suspended half of it until the fifth of May,

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Speaker 2: I think is the date. Frederick Mitchell is with Aluma

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Speaker 2: Investments and has an interesting idea of how going forward

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Speaker 2: we can mitigate against the impact of that fuel levy,

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Speaker 2: particularly on the amount you pay for a lead of petrol. Frederick,

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Speaker 2: A very good afternoon, and welcome to the show.

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Speaker 1: Yeah. Good often to you guys.

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Speaker 2: What are you proposing?

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Speaker 1: Yeah, well, I guess it's not a let's say, a

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Speaker 1: popular idea with government, but I would say, let's have

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Speaker 1: a floating factorym that includes the general fuel livy as

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Speaker 1: well as the rash levy. Because if you look at

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Speaker 1: the price or the normal levy as each consider the

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Speaker 1: three rounds the reduction we just received from Treasury, it

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Speaker 1: means that nearly seven rounds six six runds seventy three

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Speaker 1: is basically taxes and levees. That's on the fuel. So

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Speaker 1: if you have a floating floating let's say tax on fuel,

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Speaker 1: it means you can take your fuel, so let's say

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Speaker 1: twenty one round. And then if the oil price goes lower,

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Speaker 1: the government gets more in terms of taxes, and if

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Speaker 1: the price goes up, it's they get less. So basically

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Speaker 1: the tax building access basically a shock absorber to the economy. Well,

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Speaker 1: that's just a crazy idea, I guess, and I guess

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Speaker 1: it's not what It will not be popular with with

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Speaker 1: sod with government at this stage.

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Speaker 2: Absolutely well not because the finance minister and treasury would

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Speaker 2: want to be able to predict and to budget how

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Speaker 2: much money they'll be making from that levee, both for

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Speaker 2: fuel and for raff, wouldn't they.

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Speaker 1: Yeah, I guess it will have some consideration for budget purposes,

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Speaker 1: But I guess you must market determination. What's more important

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Speaker 1: your budget considerations for the year or that you get

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Speaker 1: from let's say from fuel, or is it more practicability

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Speaker 1: that you want in the market, Because in the end,

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Speaker 1: if you have practicability and you get inflation rates that's

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Speaker 1: at sleep percent, it makes you boring COFs overall over

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Speaker 1: because your bond yills respond to your let's say, inflation expectations.

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Speaker 1: So it's a doledged sword of the stage, and I

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Speaker 1: guess governments will need to look at that or something

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Speaker 1: like that in future. If this pacis going on.

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Speaker 2: It's early days, But the latest data from the Central

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Speaker 2: Energy Fund shows an under recovery of seven rand and

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Speaker 2: eighty eight cents per liter of petrol. That's four ninety

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Speaker 2: five and then seventeen rand and fifty seven cents for diesel.

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Speaker 2: When there is an under recovery, that means we need

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Speaker 2: to pay more at the fuel pump, you know, the

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Speaker 2: first Wednesday of the next month. Now we're not saying

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Speaker 2: that these are the numbers that are going to be

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Speaker 2: realized come the sixth of May, but your idea of

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Speaker 2: a floating fuel tax will help mitigate against such massive

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Speaker 2: variances in price of fuel. Wanted.

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Speaker 1: The thing is, if if there is a let's look

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Speaker 1: at just seven rand and seventeen round. If eighty percent

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Speaker 1: of your we're afraid is transported via road and diesel

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Speaker 1: is the main let's a component in the transfer course,

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Speaker 1: it means that it's kind of differently have inflationary impact

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Speaker 1: on the economy. So it's a question of reducing it

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Speaker 1: more and maybe even we say, being controversial, say let's

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Speaker 1: have a look at the fuel levy after the rough

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Speaker 1: levy that we two round fifty four, if I'm not

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Speaker 1: mistaken off, and maybe maybe we must shoulder some of

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Speaker 1: that burden as the country and take it because if

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Speaker 1: if you implement seventeen round, it's going to have a

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Speaker 1: detrimental effect on the economic activity, inflation expectation, and you

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Speaker 1: long term, let's say yields that that traffic to borrow

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Speaker 1: against all the yields.

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Speaker 2: Yeah, and I imagine that that actually is where the

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Speaker 2: impact is going to be felt. Right, Yes, we are

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Speaker 2: feeling it today because if you so we're not able

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Speaker 2: to fill up your tank yesterday and you're only going today,

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Speaker 2: you'll see the difference in the price of fuel. However,

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Speaker 2: it is down the line when the loaf of bread

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Speaker 2: is going to cost more, when a you know, panet

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Speaker 2: of chicken portions that you're going to cost more, and

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Speaker 2: all those basic needs for people to be able to

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Speaker 2: exist and to function.

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Speaker 1: Yeah, I guess that's that's a real real pain to

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Speaker 1: the consumer. But for me, if I look at the

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Speaker 1: country and it looks at economically speaking, I can't understand

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Speaker 1: why as a country and the government, we let our

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Speaker 1: refinery slopes down, because if you had the capacity to

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Speaker 1: refine your own fuel, you or we as a country

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Speaker 1: get more massive fuels from North Africa or the West

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Speaker 1: African countries, so the shock could have been least. But

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Speaker 1: now we import a lot of refined fuels like in

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Speaker 1: diesel petrol. That's and that's where they said the prices coalaction.

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Speaker 1: It eats us the hardest when we look at how

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Speaker 1: we get our fuel into the country. And that's really

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Speaker 1: a big problem and it's going to be a big

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Speaker 1: problem conce humans, maybe a big problem for producers. And

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Speaker 1: I give you some things if you if you look

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Speaker 1: at Ascom, if we have some load problems and they

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Speaker 1: run the OGDCS, it means it's going to have a

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Speaker 1: massive knock going to If it's just not on consumers,

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Speaker 1: it's going to have a not going toaffit throughout the economy.

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Speaker 1: And it's it's quite it's quite bad.

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Speaker 2: All right, Frederick, thank you very much. Frederick Mitchell is

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Speaker 2: with Aluma Investment suggesting that we should perhaps introduce a

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Speaker 2: floating fuel tax when it comes to fuel levy and

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Speaker 2: the rough the road accident and fund levy to act

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Speaker 2: as a shock absorber so that when we do have

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Speaker 2: a spike, the tax automatically scales down, and when prices drop,

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Speaker 2: it scales back up to its baseline