The AA predicts that South African fuel prices will decrease significantly in March.
These decreases are due to a reduction in global petroleum prices owing to the impact of the coronavirus, it said.
“The impact of the novel coronavirus outbreak on global economic activity cannot be overstated, and petroleum prices have retreated in lockstep with the downturn across world markets,” said the AA.
It added that these decreases are despite poor performance by the rand in February.
“Under normal circumstances, we would be focusing on our serious concerns over the rand’s trajectory, with the local currency having depreciated by nearly 30 cents against the US dollar since the start of February,” said the AA.
“However, these declines have all been overrun by the pullback in oil.”
The following fuel price changes have been predicted by the AA:
- Petrol – 9-19 cents per litre decrease
- Diesel – 55 cents per litre decrease
- Illuminating paraffin – 68 cents per litre decrease
The AA said that the future is uncertain for fuel prices in the coming months following Tito Mboweni’s budget speech.
“It is difficult to predict where current events might lead us,” said the AA.
“The rand has not found strength against the US dollar since Finance Minister Tito Mboweni’s budget speech, and the consensus of economists is increasingly that South Africa is set to lose its last remaining investment grading before long.”
The AA said that South African fuel users should not take anything for granted, as the future of South Africa’s economic situation and the full effects of coronavirus in the coming months are both unclear.
“Knock-on effects cannot be predicted and it would be unwise to budget for further fuel price drops at this stage,” it said.
Increase to fuel levy
Mboweni also announced an increase to fuel levies during his Budget 2020 speech.
The minister said that fuel levies would be increased by 25 cents per litre – 16 cents for the general fuel levy and 9 cents for the Road Accident Fund (RAF) levy.
These levy increases will take effect from 1 April 2020.
Despite this increase, Mboweni said the liabilities of the RAF are expected to exceed R600 billion by 2022/23.
“We need to take urgent steps to reduce this risk to the fiscus and bring about a more equitable way of sharing these costs,” he said.