THE GOVERNMENT might not be stepping in for now to help motorists mitigate the expected massive fuel price increase next month as negotiations for a petrol price review methodology are still ongoing.
The price of petrol is expected to surge with another record increase of R2 or more per litre in April as global oil prices remain elevated above $100 (R1 503) per barrel over Russia’s ongoing war in Ukraine.
The price of Brent crude closed at $111 per barrel on Friday after having touched a 14-year high of $130.5 earlier this week in anticipation of embargoes on Russia, the world’s third-largest oil exporter. The Central Energy Fund’s data indicates that South Africans will face another record-high fuel price hike in April.
Investec chief economist Annabel Bishop said the price of petrol could increase by more than R2 per litre to above R23 per litre in April following a R1.46 increase this month.
“Currently a R2.14 per litre hike in the petrol price is building for South Africa, and a R2.71 per litre hike in the diesel price, but this is just for the first few days of March, and the petrol price will change in April based on the average rand move in international petroleum and oil product prices,” Bishop said.
Ministers of finance and mineral resources, Enoch Godongwana and Gwede Mantashe, respectively, have been engaged in discussions that should result in a review of the methodology that calculates the price of petrol.
In response to Business Report, the National Treasury on Friday said that these protracted discussions were still ongoing whereas the Department of Mineral Resources failed to respond.
“The National Treasury and Department of Mineral Resources and Energy continue to engage and the specifics of the fuel price review will be announced in due course,” it said.
In his Budget speech last month, Godongwana announced that there will be no increase in the general fuel levy and the Road Accident Fund (RAF) levy this financial year.
The general fuel levy is currently pegged at R3.93 a litre, up from R3.77 in 2021, and the RAF levy at R2.18 a litre, up from R2.07 in 2021.
Combined, these levies add R6.11 to every litre of petrol and diesel sold in the country.
However, motorist groups want the review methodology to scrap the levies altogether.
The Motor Industry Staff Association (Misa) on Friday asked Mantashe to include the union in the government’s review of the pricing methodology for petrol.
Misa chief executive strategy and development Hermann Köstens said further hikes in the fuel price would have a devastating impact on Misa’s nearly 53 000 members, who were dependent on motor vehicle- and component sales, vehicle services and repair work.
Köstens said the announcement that there would be no increase in levies in this financial year will bring no relief as around 36 percent of the retail price of fuel still goes to the fiscus.
“Rising fuel costs directly impacts on each Misa member’s own transport costs to get to work,” Köstens said.
“Taxi operators warned that fares must increase so that they can recover losses.”
The Bureau for Economics Research economist Hugo Pienaar also warned that the shift in global oil price signalled that domestic fuel prices could increase by as much as R2 per litre in April.
“Depending on oil price moves in the rest of the month, the increase could be significantly more than R2 per litre,” he said.
BUSINESS REPORT ONLINE