Petrol prices in South Africa under review

 ·18 Oct 2022

The Department of Mineral Resources and Energy says that it is currently reviewing aspects of the petrol price in South Africa as part of its measures to cushion motorists from the blow of high prices.

Responding in a written parliamentary Q&A this week, energy minister Gwede Mantashe said that fluctuations in fuel prices in the country are largely out of the government’s control, noting that the rand/dollar exchange rate and global oil prices are the main factors that lead to price changes.

“The minister has no control over these international factors,” he said.

However, he said that his department has already made some moves to adjust fuel prices, including removing the Demand Side Management Levy of 10 cents per litre from the structure of the inland price of ULP 95 and also removing the 15% premium from the freight rate, which reduced prices by another 10 cents per litre.

Mantashe said that the department is currently reviewing how industry margins are calculated, with details on the outcome coming once it has been finalised.

Moves by the government to deregulate or adjust margins for the industry have been met with some backlash. Wholesales and retailers are firmly opposed to adjustments of this nature, saying that they already operate on thin margins.

Instead, the industry has called for changes to be made to the basic fuel price and government levies and taxes, which account for a significant portion of the price.

Taxes and levies currently make up 28% to 32% of the total fuel price (if the slate levy is included), with the majority of the pump prices attributed to the basic fuel price (51%).

The government, through the Department of Energy and National Treasury, provided some petrol price relief earlier in the year by removing 150 cents per litre from the fuel levy – but this was not a sustainable solution, having returned to normal in August.

Fuel prices have risen 14% in 2022 to date, from R19.61 in January. Despite some relief over the last two months, with successive declines in the petrol price, the latest data from the Central Energy Fund is pointing to another hike in November.

The CEF data indicates a petrol price increase of between 44 and 53 cents per litre coming in November if current market conditions persist.

Diesel drivers have fared far worse, with global demand and concerns over supply pushing the price up. This is a particularly sour note for consumers as most goods in the country are transported by diesel trucks. Higher prices for diesel invariably mean higher prices for goods.

CEF data indicates diesel drivers are in for a massive increase in November, showing a possible hike of between R1.61 and R1.64 a litre.

The table below outlines exactly where the money goes whenever you fill up:

ULP 95 (Inland) Price (cents) % of total
Basic fuel price 1145.75 51.2%
Fuel tax 394.00 17.6%
Customs and excise 4.00 0.2%
Road accident fund levy 218.00 9.8%
Petroleum products levy 0.33 0.01%
Wholesale margin 45.50 2.0%
Secondary storage 30.70 1.4%
Secondary distribution 17.94 0.8%
Retail margin 228.00 10.2%
Zone differential for Gauteng 67.90 3.0%
Slate levy 83.28 3.7%
Total 2236.00 100.0%

Read: Major worry over petrol and diesel prices in South Africa

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