After Sasol price testimony, tribunal smells a Rat Plan
October 17, 2005
 By Ann Crotty
"That WAS confidential." You could sense everyone shaking themselves out of their Friday afternoon torpor. Apparently the fact that it cost Sasol R4.66 a litre to transport petrol between depots and service stations, compared with Engen's cost of R3.28, was confidential.
Was this the crucial piece of evidence we needed? Now that we all knew this, would we be able to make sense of the industry?
It was day eight of the competition tribunal hearing into the proposed merger between Sasol's liquid fuels business and Engen, and you could feel that almost everyone in the room was taking strain.
The initial exciting pace that had been established as each of the parties presented its case, and that had been sustained by the disclosure that Sasol had scripted the government's dramatically revised position on the merger, had been slowed somewhat by a few days of economic analysis of the industry.
And it almost ground to a halt when the statisticians took over, determined to interrogate claims about every litre of petrol that moved between Durban and Johannesburg.
With each day came the certainty that a hearing that was initially booked to take three weeks was likely to run closer to six weeks.
To their considerable credit, the three members of the tribunal remained aloof from the jaded body language of the highly paid hangers-on scattered around the room; they sat up straight and looked as though they were fascinated with every detail of the proceedings.
Equally as impressive was that even on day eight, tribunal chairman David Lewis seemed determined to find some evidence of a "market" at work in this industry.
But by Friday afternoon Lewis did reveal signs of exasperation, as he likened the workings of the retail end of the industry to Gosplan circa 1926.
This was an allusion to the highly inefficient central planning agency of the Soviet Union, which was responsible for drawing up and auditing successive five-year plans for various sectors of that economy.
Nobody attempted to dispute this description, although one subsequent suggestion was that the more accurate name was the Rat Plan, which was short for Service Station Rationalisation Plan.
The Rat Plan, as it is referred to in the industry, is part of the department of mineral and energy's plan to deregulate the petrol price that was outlined in the department's 1999 white paper.
After eight days of hearings I am, of course, in terms of normal journalistic standards, an authority on the industry.
And to maintain this position of authority, it is important that I do not attempt to make sense of the industry, because outside of a Gosplan frame of mind, it appears not to make any sense.
If you suspect this statement may just be more journalistic hyperbole, get hold of a copy of a document entitled Fuel Prices in South Africa - How it (sic) is Calculated.
The seven-page document describes the 16 different bits and bobs, including taxes, that go into pricing a litre of petrol at your service station. The largest of the 16 bits is the import parity pricing bit, which the document describes as "an arm's-length market-related approach used by most countries worldwide and is a system that benefits the consumer".
What remains a little unclear, however, is how this benefit arises unless the consumer owns shares in Sasol.
Meanwhile, perhaps Lewis has inadvertently touched on the solution: allow the merger, then nationalise the whole thing ˆ la Gosplan.
Alide Dasnois is away
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