‘Expect Fuel Price Hike Following Fuel Levy Increase Starting April’ – AA


Added to the looming economic inconsistencies that has rocked the country, South Africa’s Automobile Association (AA) is predicting an increase of petrol to be between 31 cents and 35c a litre – on top of the 30c a litre increase in the fuel levy which becomes effective from April.

South Africa’s petrol price has continued to adjust on monthly basis because of a number of factors, mainly international petroleum prices, and the Rand/US Dollar exchange rate.

Based on un-audited mid-month data released by the Central Energy Fund (CEF), the AA said sustained gains in international petroleum prices were the biggest factor affecting the predicted hikes. The government’s Fuel Levy is also set to increase by 30 cents a litre from the beginning of April.

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At the time of writing, oil was trading at $42.16, up from its lows of around $30 at the beginning of this year. AA added that south Africans should against the current backdrop, expect a hike of 60c for diesel and 52c for illuminating paraffin.

“Although the average rand/US dollar exchange rate has continued to retreat since the beginning of the month, this positive factor has been overcome by the renewed uptick in oil prices,” the AA added.

AA explained that the Basic Fuel Price (BFP) is usually calculated using costs associated with shipping petroleum products to South Africa from the Mediterranean area, Arab Gulf, and Singapore, and these costs include insurance, storage, and the cost to use harbour facilities when off-loading petroleum products into storage facilities.

In March 2016 these costs totaled R4.70 per litre for 93 unleaded petrol (inland). When collected, the money from the Fuel Levy is administered by the National Treasury, and is treated as a general tax, not, as many people assume, road-related expenses, it stressed.

With the increase in fuel levy fuel as announced by the Finance Minister Pravin Gordhan in his 2016 National Budget, the predicted increase of 60c a litre for diesel, could mean a price increase of nearly a rand a litre for diesel users

“Along with the further interest rate hike announced by the SA Reserve Bank (Sarb) on Thursday, motorists’ budgets are likely to come under renewed pressure next month,” cautioned the AA

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