The latest data from the Central Energy Fund (CEF) shows that motorists can expect a big jump in the petrol price next week, largely due to a much weaker rand.<\/p>\n
The CEF snapshot for 23 February 2023 shows that petrol prices are likely to increase by between R1.22 and R1.27 a litre. Diesel will also see prices climb, but at a lower 26 cents per litre.<\/p>\n
The Department of Mineral Resources and Energy is expected to announce the official changes in the coming days, before they take effect on Wednesday, 1 March 2023.<\/p>\n
These are the expected changes:<\/p>\n
For petrol prices, the cost of international products – based on the oil price and imported – and a weaker rand vs the dollar are contributing to the big hike. Product prices for diesel are actually contributing to an over-recovery for diesel, but the weaker rand is reversing any gains.<\/p>\n
Global oil prices remain range-bound, trading between $80 and $85 a barrel.<\/p>\n
Oil has been whipsawed this year by bullish optimism around China\u2019s rebound following the end of Covid Zero and persistent concerns over a US economic slowdown and wider threat of global recession.<\/p>\n
On the one hand, markets pull the price higher as they expect demand to increase significantly from China lighting a fire under production after years of lockdown, as well as a tighter supply due to Russian sanctions and active cutting by OPEC+ naitons.<\/p>\n
On the other, central banks have kept interest rate hikes going, setting the stage for muted global economic growth and a slowdown in major economies. While some analysts have predicted a move towards $100 a barrel in the middle of the year, markets are currently pulling back-and-forth, awaiting more data.<\/p>\n
The rand, meanwhile, has been on the back foot for much of the year and has settled above R18 to the dollar.<\/p>\n
While the local unit is constantly being thrown around at the whims of international markets – particularly the US, where any indication of pressure sends investors into a risk-off mode which impacts emerging markets, including South Africa – it has also suffered the ills of the local news cycle.<\/p>\n
Specifically, markets are not convinced by the government’s plans to tackle the ongoing power crisis.<\/p>\n
The rand tanked following president Cyril Ramaphosa’s State of the Nation Address, unconvinced by his promises to tackle the country’s many ills. And while it rallied following the 2023 budget, which laid out some of the more solid plans to deal with things like Eskom’s debt, the reality of the polycrisis in South Africa is too large a barrier to overcome.<\/p>\n
On Friday, the rand was trading at R18.22 versus the dollar – continuing to sail choppy waters.<\/p>\n
Some good news<\/strong><\/p>\n While prices are set to increase in March 2023, there is at least a bit of good news for prices in April.<\/p>\n National Treasury has opted to provide some relief for motorists in 2023 by not hiking the General Fuel Levy or Road Accident Fund levy this year – the second tax year in a row.<\/p>\n The levies are often hiked as an easy way to draw additional revenue to the fiscus, and there was speculation among some economists and analysts that it would again be hiked this year for that purpose.<\/p>\n However, finance minister Enoch Godongwana said in his budget speech that revenue collections for the year were big enough to avoid any sizeable tax adjustments.<\/p>\n The good news was even greater for businesses operating in the food production sector, as they are now exempt from paying the RAF component of the diesel price when used for energy generation.<\/p>\n The General Fuel Levy is currently pegged at R3.94 per litre, and the RAF levy is at R2.18 per litre of 95 petrol. Combined, they add R6.12 to every litre of petrol and diesel sold in the country.<\/p>\n
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