Energy

Here is the expected petrol price for March as Eskom’s power crisis hits the rand

Staff Writer

 ·15 Feb 2019

South African motorists could be in for a sizeable petrol price increase in March, as Eskom’s power crisis hits the rand, making it more expensive for the country to buy international petroleum products.

According to the latest data published by the Central Energy Fund (14 February), the current fluctuations in fuel prices shows an under-recovery of 43 cents per litre for petrol, and around 60 cents per litre for diesel.

An under-recovery means prices at the pumps will reflect higher by the aforementioned numbers, should the current trends continue until the end of the month.

The price of illuminating paraffin could go up by 47 cents per litre.

The main contributor to the under-recovery is climbing international petroleum prices, which has been slightly countered by a stronger rand/dollar exchange rate in the first two weeks of February.

Oil prices have climbed to around $64 a barrel, up from $60 a barrel in January, and far higher than the $50 seen in late 2018.

However, the CEF’s trend graph for the ZAR/USD exchange also shows a steady climb, pointing to a much weaker position for the local currency.

Over the past week, the rand has been hammered by Eskom load shedding, and exacerbated by a stronger dollar and other international conditions working against the local currency.

This has pushed the rand over R14 to the dollar, with its current range at between R14.00 and R14.35.

According to corporate treasury manager at Peregrine Treasury Solutions, Bianca Botes, the substantial economic losses suffered during load shedding, the prospect of an even worse performing economy, and unrest due to a trimming of the public sector workforce was enough to send investor sentiment out the door.

“The rand quickly retreated against major currencies, slipping over 4% against the greenback during trade this week,” she said.

The market will now look toward finance minister Tito Mboweni’s budget speech next week (20 February), where he is expected to give clarity on the current state of South Africa’s finances, and how government will balance the budget.

Analysts expect little in the way of taxes, considering that it is an election year, but it is understood that fuel taxes will still feature prominently – though these will only impact the price of petrol upon implementation in April.

This is what you can expect to pay at the pumps next month based on the CEF’s mid-month data.

Read: Big fuel tax increases could be on the way for SA motorists