Petrol prices in South Africa surged by approximately R1.50 per litre in May 2023 compared to the same period last year, according to the Automobile Association (AA).
The AA explains that this translates to an increase of around 7% over the course of a year for 93ULP inland and 95ULP at the coast.
While petrol prices have seen a notable rise, the wholesale price of diesel during the same period has decreased from R21.99 per litre in May 2022 to R20.15 per litre in May 2023 inland. And from R21.34 per litre in May 2022 to R19.43 per litre in May 2023 at coastal rates, as highlighted by the AA.
However, the AA emphasises that the decrease in diesel prices should be considered against the backdrop of significant price fluctuations experienced between June and December 2022.
In July 2022, the price of a litre of diesel inland peaked at R25.40, while petrol prices during the same period reached as high as R26.74 per litre for ULP95 inland and R26.09 per litre for ULP95 at the coast.
Comparing May 2022 and May 2023, the AA notes that ULP93 inland increased from R21.51 to R23.01 per litre. While ULP95 at the coast rose from R21.09 to R22.62 per litre.
Furthermore, the AA highlights that South Africa’s fuel price consists of various components, making it more expensive than in neighbouring countries where South Africa exports fuel.
To provide consumers with an understanding of the breakdown of petrol prices, the AA publishes a fuel price breakdown, focusing on 93 Octane fuel inland and 95 Octane at the coast.
The AA explains that the costs are calculated using May fuel price data, incorporating the two main taxes imposed on every litre of fuel: the General Fuel Levy (GFL) and the Road Accident Fund (RAF) levy. These levies typically see increases announced in February during the Finance Minister’s annual Budget speech, taking effect in April.
Although no increases were made to these levies in 2023, they remain significant contributors to the overall fuel prices. In May 2023, the GFL and RAF levies together amount to R6.14 per litre of petrol sold in the country, with the GFL at R3.96 and the RAF levy at R2.18. The GFL for diesel is lower at R3.82, while the RAF levy remains the same.
Increasing fuel prices also lead to higher costs for goods transported across the country, as operators pass on these additional expenses to consumers.
The AA reiterates its position, as stated in mid-April 2021 during representations to the Parliamentary Portfolio Committee on Mineral Resources and Energy, that several steps can be taken to mitigate rising fuel costs in South Africa.
These include recalculating and auditing the existing elements within the fuel pricing model and reducing the costs of the Road Accident Fund (RAF) through improved management, governance, road safety measures, traffic policing, and pedestrian safety education.
The misappropriation of funds and corruption are also identified as factors diverting money away from the General Fuel Levy (GFL), which could be better allocated and accounted for. Additionally, investments in alternative forms of public transport and improvements to Transnet are seen as vital measures.
In May 2023, the breakdown of South Africa’s fuel price consists of four main elements: the GFL, RAF levy, Basic Fuel Price (including freight, insurance, cargo dues, storage, and financing), and wholesale and retail margins, as well as distribution and transport costs. The GFL represents around 17% of every litre of petrol sold in South Africa, amounting to R3.96, while the RAF levy accounts for approximately 11% at R2.18 per litre.
Together, these two levies are expected to contribute around R138 billion in revenue, with approximately R90 billion going to the GFL and the remainder to the RAF. The GFL contribution directly goes to Treasury and can be utilised for any government-determined purpose.
Fuel prices in South Africa are adjusted on the first Wednesday of every month, based on the Rand/US Dollar exchange rate and international petroleum prices. The Basic Fuel Price (BFP) is calculated considering the costs associated with shipping petroleum products from various regions to South Africa. This includes insurance, storage, and wharfage.
Other costs influencing petrol prices include transport costs, customs and excise duties, retail margins, and secondary storage costs. These costs currently total R4.24 per litre for inland petrol and R3.52 per litre for coastal petrol, according to the AA.
Based on the current data, filling a 50-litre tank of fuel inland with 93ULP would cost R1,150.50, while 95ULP at the coast would cost R1,130. This represents an increase of R76.50 compared to a year ago.
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