South Africa’s fuel retail sector is under real strain, with station owners warning that soaring pump prices, higher input costs and tightly controlled margins are pushing many forecourts to the edge. Speaking to Kaya Biz, SAPRA national vice-chair Lebo Ramolahloane said the public often assumes petrol stations are cashing in when fuel prices rise, but the reality on the ground is far less comfortable for operators.
The warning comes at a time when South African motorists have already been hit by another painful round of increases. Petrol jumped by R3.27 per litre, lifting the inland price to R26.63 per litre, while diesel increased by R5.27 per litre. For households already battling high food, transport and electricity costs, it is another blow to disposable income. For businesses, especially those dependent on transport and logistics, the latest increases are feeding through the economy in ways that will be felt well beyond the forecourt.
Ramolahloane said the biggest misconception is that retailers are making huge profits every time prices at the pumps go up. In practice, he said, many owners are operating on very thin margins and carrying substantial risk just to keep stations open and employees paid. The pressure has become especially intense because the amount of cash needed to fill underground tanks has risen sharply, while the retail margin remains fixed by regulation.
According to SAPRA, filling a station’s tanks previously cost about R1 million, but that figure has now risen to between R2 million and R2.5 million. That sudden jump means retailers need far more working capital just to restock fuel. Ramolahloane said that in many cases the money had to be found almost overnight, leaving station owners exposed to banking risk and cash-flow pressure at a time when margins have not kept pace with the cost of doing business.
He said retailers are still working on margins of roughly R3.15 per litre, even though diesel can now sell for more than R30 per litre in some parts of the market. But because the margin is regulated, the higher pump price does not translate into a windfall for station owners. Instead, the bigger turnover often masks the fact that the profit slice remains very small. In a sector this capital intensive, that can quickly become unsustainable.
The financial squeeze is not coming from fuel alone. Ramolahloane said service stations are also dealing with rising wages, salary demands and Eskom tariff hikes, all of which are tightening the screws on already thin profits. In a country where power cuts, transport costs and inflation have already weakened many small and medium businesses, service stations are now fighting on several fronts at once.
Fuel retail margins are under pressure as the South Africa fuel retail sector battles higher costs
Ramolahloane told listeners that petrol stations typically make net profits of only 1% to 5%, a figure that leaves little room for error when prices spike or volumes fall. SAPRA argues that the current regulated model is no longer suited to the realities of operating in modern South Africa, where inflation, finance costs and utility bills have all climbed sharply.
“The formula itself is actually outdated,” he said, adding that it needs to be reviewed against the current market environment. That call is not new, but the latest round of fuel hikes has given it renewed urgency. SAPRA has confirmed that talks with the Department of Mineral and Petroleum Resources are under way, although no final agreement has been reached on what changes, if any, could be made to the system.
For many forecourt owners, the challenge is no longer just about selling fuel. The business model has shifted, and survival now depends increasingly on non-fuel revenue. Ramolahloane said convenience stores have become a vital part of operations because they usually carry better margins than fuel itself. Many stations are also adding quick-service restaurants and, in some cases, electric vehicle charging infrastructure as they try to diversify income streams and protect jobs.
That diversification is not happening by choice alone. It is a response to the reality that fuel sales are under pressure and customer behaviour is changing. Ramolahloane said motorists are filling up with fixed rand amounts rather than topping up full tanks, which means volumes are declining even when turnover rises. In other words, a station may collect more money in nominal terms, but it is selling less fuel overall.
That trend matters because volume is what keeps a station moving. If motorists buy less fuel per visit, the knock-on effect is felt in inventory planning, cash flow and staffing decisions. Ramolahloane warned that if conditions worsen, some stations may be forced into cutbacks, including reduced trading hours. He stressed that operators do not want to pass the pain on to staff, especially petrol attendants who are also dealing with the same cost-of-living pressures as everyone else in the country.
There is also a wider economic concern hanging over the industry. Diesel is the workhorse fuel of South Africa’s logistics, agriculture and freight sectors, so sharp increases feed directly into the cost of transporting goods and producing food. That makes the current price environment more than just a motorists’ issue. It affects the flow of produce, the movement of goods and the cost of keeping businesses running across the country.
Ramolahloane said SAPRA members are watching Brent crude oil prices and developments in the Middle East closely, hoping that global conditions will settle and offer some relief. For now, though, the sector is in wait-and-see mode, balancing expensive inventory, regulated margins and falling volumes. As we reported earlier, the pressure at the pumps is no longer only being felt by drivers — it is being absorbed, day after day, by the service stations trying to keep South Africa moving.