As the calendar turns to March 2024, South African motorists and consumers brace for adjustments in fuel prices, influenced by the latest insights from the Central Energy Fund (CEF).
Petrol price forecast for March 2024: A steeper fuel hike on the cards
Disclaimer: The petrol price forecasts provided in this article are based on speculative data and should be considered as such. The information has been sourced from the Central Energy Fund, and while we strive to present the most accurate and up-to-date information, Swisher Post does not guarantee the accuracy, completeness, or timeliness of the data. Prices can fluctuate due to a variety of factors beyond our control, including but not limited to changes in international oil prices, currency exchange rates, and government taxes. Therefore, Swisher Post shall not be held liable for any discrepancies or differences in the actual prices. Readers are advised to consult official sources for the most current petrol price information.
According to data gathered as of 29 February 2024, under recovery rates for various fuel types have been identified, signalling potential shifts in the Basic Fuel Price (BFP) that could impact the retail and wholesale markets.
Under recovery, a critical indicator in fuel pricing mechanisms, reflects the difference between the actual costs of fuel, as dictated by the international market and exchange rates, and the current domestic selling prices.
Here’s a closer look at the under-recovery rates, as of Thursday, 29 February 2024:
- Petrol 95: R1.20 per litre
- Petrol 93: R1.15 per litre
- Diesel 0.05%: R1.05 per litre
- Diesel 0.005%: R1.18 per litre
- Illuminating Paraffin: R0.63 per litre
These figures suggest that the selling prices of fuel in South Africa are currently lower than what the market conditions dictate, necessitating an upward adjustment to align with the BFP.
This scenario often leads to an increase in petrol prices, impacting both consumers and industries reliant on fuel for transportation and logistics.
For motorists, this anticipated adjustment means that budgeting for fuel expenses in March 2024 will require accounting for higher prices at the pump.
The exact extent of the price increase will depend on a variety of factors, including changes in global oil prices and the Rand’s performance against the US dollar in the intervening period.
While the exact increase in fuel prices remains to be seen, the early indicators from the CEF provide valuable insight into the likely direction of price adjustments.
Motorists and industry stakeholders would do well to monitor these developments closely, as they could have substantial implications for budgeting and financial planning in the coming month.
What goes into the final retail price of fuel in South Africa?
Determining the final retail price of petrol in South Africa relies heavily on the rand’s performance in currency markets and oil price movements.
Using this information, the CEF can formulate basic fuel price (BFP) estimates which, in essence, offer South African importers a snapshot into the cost of buying petrol from an international refinery, transporting the product and ensuring it against possible losses at sea and on land.
However, before the retail price of petrol is finalised at petrol stations, several additional costs are included in the BFP:
Government levies
- IP tracer levy (reimbursement to the oil industry for buying IP tracer dye and injecting it into IP to curtail the mixing of IP and diesel)
- General Fuel levy (tax levied by the government)
- Slate levy (to finance the cumulative under-recovery of the industry)
- RAF levy (to compensate for people involved in road crashes and accidents)
- Petroleum products levy (reimbursement to the pipeline users for the applicable NERSA tariff on transporting fuel through the pipeline)
Additional costs
- Wholesale margin (markup to the price of a product to account for wholesaling costs)
- Service cost recoveries
- Storage, handling and delivery costs
- Distribution costs
- Dealers margin (commission to the fuel pump dealers for retail operation)
- Zone differential (applicable to inland regions)
- Customs and excise duty
Monthly adjustments to fuel prices are made on the first Wednesday of each month based on these factors. The next changes will take effect on Wednesday, 6 March 2024.