SA reviewing fuel pricing method

Petrol pump
Since last month, fuel prices in South Africa have increased substantially and they again increased this month (May) due to several international and local factors. A review of how South Africa calculates its basic fuel price is now underway - to be completed by the end of the financial year, according to the Department of Energy.

Minister of Energy Dipuo Peters (DoE) has indicated the recent increases were out of the government's hands. She admitted that while the average R/$ exchange rate had strengthened in recent months, leading to a decrease in the basic price of petrol, diesel and illuminating paraffin by at least 5c per litre, SA fuel prices were set in line with global market issues such as geopolitics, currency strengths, and speculator activity resulting in SA being “a price taker" the Mail and Guardian online reported Peters as saying.
However, local factors have also played a role. In mid-March, the National Energy Regulator of South Africa (Nersa) confirmed it had granted Transnet Pipelines a 22% tariff increase for its Durban-to-Johannesburg fuel pipeline for 2012/13. This increased Gauteng’s petrol price by a further 4c/l as from 1 April.

Even prior to the Nersa decision, prices were poised to rise by a further 28c/l in April, owing to increases announced for the fuel levy by Finance Minister Pravin Gordhan in his February Budget speech.

According to DoE chief director for hydrocarbons, Muzi Mkhize, the DoE has started a review of the way SA calculates the basic fuel price. This review will be completed before the end of the financial year.

The basic fuel price is currently based on calculations based on benchmark prices from fuel refineries in Singapore and the Mediterranean regions.
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