Massive petrol price hike on the cards for South Africa
South African motorists could be paying R3.81 or more per litre of petrol from next month, the latest data on the Basic Fuel Price (BFP) from the Central Energy Fund shows.
Earlier this month, the data pointed towards average under-recoveries of roughly R2.07 for unleaded 95 petrol and R2.03 for unleaded 93.
As of 23 May 2022, that estimated increase had climbed to around R2.35 for unleaded 95 and R2.27 for unleaded 93, averaging about R2.31 per litre.
That does not include the re-application of the full general fuel levy (GFL), which will see another R1.50 added to the price.
Combined with the return of the GFL, motorists could see an increase of about R3.81 per litre next Wednesday, should the exchange rate and oil price remain roughly the same.
Wholesale diesel prices are also expected to increase by about R1.23 for 500ppm diesel and R1.20 for 50ppm, or R2.73 and R2.70 when adding the entire GFL.
The charts below show how the rand-dollar exchange rate, international product prices of South Africa’s basic fuel basket, and the BFP changed from start-April 2022.
Global fuel prices have surged in the wake of Russia’s invasion of Ukraine in February.
Trading Economics’ data shows that from 25 February 2022 to 8 March 2022, the price per barrel of Brent Crude Oil surged from about $88 to $125.
Coupled with fluctuations in foreign exchange rates, the surge in oil prices increased petrol and diesel prices in South Africa significantly.
Where a motorist would pay R19.61 for a litre of unleaded 95 at an inland petrol station in January 2022, they would have to cough up R2 more by March.
Early data on the basic fuel price during March pointed towards big hikes of more than R2 for petrol and R3 for diesel.
That prompted the South African government to intervene with a two-month reprieve in the form of a 50% discount on the general fuel levy.
The tax cut shed R1.50 from the fuel price, substantially reducing the April and May price increases.
End of relief — for now
But that relief is set to end in June, with the government confirming it has no plans to extend the discount.
Alongside the announcement of GFL reduction, the government had promised further measures to alleviate pressure on motorists in the long term.
These included a cap on the price of unleaded 93 petrol and a review of the regulatory accounting system used to calculate the retail, wholesale, secondary, and distribution margins on fuel.
It is unclear what progress the government has made, as it has yet to provide an update to the South African public.
Agriculture groups have warned that the fuel price increases will lead to increased costs for transporting their produce, which will result in higher food prices.
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