Electricity, petrol price double blow for SA consumers

South African consumers are bracing for a double blow in April when both the petrol price, and electricity tariffs are set to rise substantially.

The Automobile Association (AA) said last week that local fuel prices may jump by as much as R2.00 a litre at the beginning of April.

The AA pointed to Central Energy Fund’s preliminary mid-month data which showed that motorists are set to be battered by high international petroleum prices, while the Rand continues its weakened trend against the US dollar.

Motorists were already reeling from a 96 cents per litre increase at the beginning of March.

StatsSA noted that the petrol price started falling after April 2014. It said that filling a 45 litre tank during that month would have set you back R637, with the price of inland 93 octane petrol at R14.16 per litre.

There was some respite in the following months, with the price settling to R13.43 per litre in October 2014.

Petrol prices then fell sharply, in line with weaker oil prices. Motorists paid almost 25% less for fuel in February 2015 than they did in October the previous year. “Filling a 45 litre tank in February 2015 would have cost R454, with the petrol price at R10.09 per litre,” StatsSA said.

According to the latest data (20 March) from the Central Energy Fund, the fuel price is showing the following under-recovery:

  • 93 Octane petrol – 110 cents
  • 95 Octane petrol – 112 cents
  • Diesel 0.05% – 100 cents
  • Diesel 0.005% – 100 cents
  • Illuminating paraffin –  71 cents

To add to consumer woes, in February, presenting his first main budget as finance minister in the National Assembly, Nhlanhla Nene announced the general fuel levy would increase by 30.5c/litre and the Road Accident Fund levy by 50c/litre, effective from April 1.

The Department of Energy will make the final announcement regarding fuel price changes on 27 March.

Eskom application successful

Eskom meanwhile confirmed on Monday (23 March) that a price increase will be implemented on 1 April 2015, despite a lack of delivery amid constant load shedding warnings by the power utility.

“Eskom confirms that the price increase to be implemented on 1 April 2015 to Eskom direct customers is still 12.69% and for municipalities will be 14.25% from 1 July 2015 as approved by the National Energy Regulator of South Africa (Nersa) during November 2014,” it said.

In 2013, Nersa said that Eskom could only raise tariffs 8% a year for the five years to 2018, instead of 16% requested by the power utility.

However, the regulator noted that Eskom’s costs exceeded projections for the three years to 2013, enabling the company impose higher tariffs.

DA Shadow Deputy Minister of Finance, David Ross, said that Nersa has also confirmed that Eskom is formalising an application in consultation with National Treasury and South African Local Government Association (SALGA) to reopen the multiyear price determination, allowing for a further spike in electricity tariffs.

“The application was due on the 15 March, but the Minister of Finance could grant an exemption to accommodate implementation in the current financial year,” Ross said.

Ross said that Eskom’s 12.69% hike for direct customers far exceeds the 8% annual tariff increase Nersa initially agreed to as part of the multiyear price determination to March 2018.

“South Africans simply cannot afford further increases to the electricity price, especially not to bail out an ailing State Owned Enterprise.”

Bloomberg reported last week that Eskom’s latest request is for a 25.3% price increase – which would be triple what was agreed to in the multiyear price determination.

“The increase will help pay for diesel to run Eskom’s open-cycle gas turbines, as well as to continue paying independent power producers – most of whose contracts expire next week.

“It is therefore essential that the Minister does not entertain an application, nor grant an exemption to Eskom that would empower a reopening of the price determination process, Ross said.

More on electricity and petrol prices in SA

Massive Eskom price hike in April

Massive petrol price hike in April

Eskom wants massive tariff rise

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Electricity, petrol price double blow for SA consumers