Petrol users across South Africa are paying around R5.00 a litre more for fuel in May 2021, compared to a year ago.
This after significant fuel price increases throughout the first few months of the year, which has seen fuel reach record highs in April, according to the Automobile Association of South Africa (AA).
“Although fuel prices dipped a little in May, the fuel price remains high, affecting all sectors of the economy. Filling a 50-litre tank with petrol in South Africa costs just more than R250 in May 2021 than it did in May 2020,” it said.
In May 2020, a litre of 93 Octane petrol inland cost R12.22, while a litre of 95 Octane petrol at the coast cost R11.52. These same fuel a year later costs R17.01 a litre and R16.51 a litre respectively.
“This represents a 39% increase in 93 Octane inland from 2020 prices, and a 43% increase for 95 Octane at the coast,” the AA said.
“South Africa’s fuel price is comprised of many different elements, some of which make fuel in the country more expensive than in neighbouring countries to which South Africa exports.”
The AA said that the fuel price in South Africa is comprised of four main elements:
- The General Fuel Levy
- Road Accident Fund Levy
- Basic Fuel Price (freight and insurance costs, cargo dues, storage and financing)
- Wholesale and retail margins, and distribution and transport costs
As of April 2021, the GFL is R3.93 which represents around 23% of every litre of petrol sold in South Africa. Similarly, at its current pricing of R2.18 a litre, the RAF Levy represents around 13% on every litre of fuel sold.
Combined the GFL and RAF levies total R6.11 (for both inland and coastal prices), a 27 cents a litre – or 4.64% – increase from 2020.
“Last year, when fuel prices experienced record decreases, the combined levies comprised much less of a percentage of the total fuel price,” the AA said.
“The total levies combined in 2021 are expected to deliver around R126 billion to government with around R83 billion coming from the GFL and R43 billion coming from the RAF Levy.”
The tax collected from the GFL goes directly to Treasury and can be used for any purpose that the government determines.
In South Africa, the fuel price is adjusted on the first Wednesday of every month and is determined by two main factors: The rand/US dollar exchange rate, and international petroleum prices.
The Basic Fuel Price (BFP) is calculated based on costs associated with shipping petroleum products to South Africa from the Mediterranean area, Arab Gulf, and Singapore.
These costs include insurance, storage, and wharfage (the cost to harbour facilities when off-loading petroleum products into storage). The current BFP is R7.15, significantly higher than in 2020.
Other costs associated with the petrol price include:
- Transport costs from the harbour to inland areas, which accounts for the difference in price between coastal and inland prices;
- Custom and excise duties, retail margins paid to fuel station owners – currently R2.22 on every litre sold;
- Secondary storage costs. These costs currently total R3.75 for inland petrol and R3.23 for coastal petrol.
Using the current data, filling up a 50-litre tank of fuel inland (93 Octane) will cost R850.50 and R825.50 at the coast (95 Octane) – R249.50 more now than a year ago.
In addition to publishing the 2021 fuel price breakdown, the AA has highlighted the key points it made to the Parliamentary Portfolio Committee on Mineral Resources and Energy in mid-April.
The association was asked to make representations to the committee on how to mitigate rising fuel costs in South Africa. The AA made the following key recommendations:
- An investigation to be conducted on the current pricing model for all fuel;
- A Recalculation and audit of existing elements within the pricing model;
- A Reduction of the cost of the Road Accident Fund (RAF) to motorists ;
- Better allocation and utilisation of funds from the General Fuel Levy (GFL);
- Investment in alternatives to the country’s current reliance on fuel.