South African consumers are set for yet another hike in the petrol price in April as an additional 30 cents is added to the price by way of a ‘Fuel Levy’.
This, noted the Automobile Association (AA), will move the Fuel Levy – a tax collected on every litre of fuel sold – from R2.55 to R2.85 a litre.
The money collected through the Fuel Levy is administered by the National Treasury, and is treated as a general tax, not, as many people assume, road-related expenses, it stressed.
In South Africa the petrol price is adjusted monthly based on a number of factors, mainly international petroleum prices, and the Rand/US Dollar exchange rate.
The Basic Fuel Price (BFP) is calculated using costs associated with shipping petroleum products to South Africa from the Mediterranean area, Arab Gulf, and Singapore, the AA explained.
These costs include insurance, storage, and the cost to use harbour facilities when off-loading petroleum products into storage facilities.
In March 2016 these costs totalled R4.70 per litre for 93 unleaded petrol (inland).
Other costs associated with the petrol price include transport costs – from the harbour to other areas – customs and excise duties, the retail margins paid to fuel station owners, and secondary storage costs. Importantly, these other costs also include the Fuel Levy, and the Road Accident Fund (RAF) Levy.
According to the AA, in March 2016, these other costs totalled R6.76 (for inland users) per litre for 93 unleaded petrol. Of this, R2.55 was allocated to the Fuel Levy, and R1.54 was allocated to the RAF Levy.
The Fuel Levy goes directly to the National Treasury, while the RAF Levy goes to the RAF, and is used to care for victims of car crashes.
This means that for every litre of petrol costing R11.46, R4.09 (or almost 35%) is allocated to different government levies. In April this will increase to R4.39 per litre – the AA said.
“Using this formula, filling a 50 l tank with 93 unleaded petrol inland, will cost you R573. Of this, R127.50 goes directly to the Fuel Levy with a further R77 going to the RAF Levy, giving a combined total of R204.50,” the association said.
“If the price of petrol remains unchanged at the end of April, and only the increase in the Fuel Levy is recorded, the cost of filling a 50 l tank will increase to R588. Of this, the Fuel Levy will comprise R142.50, and RAF Levy will remain unchanged at R77, for a combined total of R219.50 generated from the two levies,” it said.