The daily under-recovery exceeded 100 cents per litre (c/l) to reach 100.661 c/l on January 29 compared with an over-recovery of 3.855 c/l on the first day of this year.
The change in the daily petrol price has largely been due to the weakening rand which moved from R8.5148 per US dollar on January 1 to R9.0675 on January 29.
The Department of Minerals and Energy is therefore likely to implement a retail petrol price increase of about 42 cents per litre (c/l) on February 6‚ provided the daily under-recovery remains near the January 29 level. The wholesale diesel (0.05% Sulphur) price could rise by a more subdued 19c/l.
An under-recovery means that the basic petrol price based on the daily product price and exchange rate is more than the basic fuel price used in the calculation of the monthly retail petrol price.
An under-recovery therefore implies that the retail petrol price will most probably be increased at the next monthly price adjustment‚ provided the government does not introduce a new levy or raise either the wholesale or retail margin.
The retail petrol price is adjusted monthly on the first Wednesday of the month in accordance with the previous averaging period’s over- or under- recovery.
The current averaging period runs from December 27 to January 31 and a price announcement is due on February 1. The average under-recovery for the period December 27 to January 29 for petrol was 36.9c/l and the average under-recovery for diesel was 15.7c/l.