Fuel strike hits road fund hard
THE fuel strike, which has left many petrol stations in Gauteng dry, may have a negative effect on the already cashstrapped Road Accident Fund, which gets a substantial portion of its income from the fuel levy.
The fuel levy paid by motorists during July was the least the fund had received in about eight months, leaving it with cash-flow difficulties.
This affected 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 last month, the fund send a letter to all service providers in which it warned of an even bigger shortfall in its budget.
The fund’s spokeswoman, Linda Rulashe, said on August 4 that 5 262 service providers and claimants were owed R9.04 billion.
The July fuel levy was the lowest since November last year. It only brought R2.4 billion into the fund’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 fund warned that the situation would have a negative effect on its cash-flow forecast and payment plans for August.
The fund receives R1.54 for every litre of petrol sold, and its funding model is based on the volume of petrol sold. If this decreases, the fund’s income also decreases.
“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.
Rulashe said that, despite the crippling circumstances, which have been hampered by the tough economic climate, the fund still had to fulfil its mandate and compensate road-accident victims.
The government has emphasised that it will not continue supporting an unsustainable dispensation like the one currently administered by the fund, whose unfunded liabilities stood at R145 billion at June 30 this year.
Rulashe said policy change was no longer an option, and the introduction of the Road Accident Benefit Scheme was even more pressing.
It will replace the present fault-based system which the fund says is characterised by costly and prolonged litigation, as well as high administration costs.
The fund 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, as well as having more claims directly instituted with the fund (sidestepping lawyers). The fund said these measures had already saved it R1 billion.