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Petrol price will be increased by R1.24 next month

South Africans will be paying record prices for gasoline starting next month, with the Automobile Association (AA) forecasting massive fuel price hikes based on fuel price data from the Central Energy Fund.

“The data shows an increase of R1.25 per liter for 95 octane petrol, R1.24 per liter for 93 octane, R1.29/l for diesel and a significant increase of R1.22/l for paraffin relieving said the AA.

An analysis of the gas price movement this month shows that international petroleum prices are fully contributing to the expected gains, with the stronger Rand buffering against what would have been larger gains.

Petrol prices highest in history

“The Rand is currently trading in a more positive band than it has been in recent weeks, with the local currency shaving about 17 cents off oil’s negative movement. Without this, the expected increases for fuels across the board could have been between R1.40/l and R1.47/l,” the AA said.

Given the current outlook, petrol prices in South Africa will rise above R21 for the first time, with 95 octane petrol in Gauteng costing around R21.39/l and 93 octane R21.13/l, surpassing the record set at R20. 42/l in December last year.

The 95-octane coastal price will also exceed R20/L for the first time, rising to R20.67/L based on current data. Diesel and clarifying paraffin will also increase to levels never seen before.

These annual increases forecast by the CEF show significant percentage increases from March 2021.

“For example, the price of 95-octane gasoline domestically could rise from R16.32 a year ago to R21.39 in March 2022, a 31% increase. The cost of diesel could rise from €14.12 in March 2021 to €19.33 in 2022, an increase of 37%,” the AA said.

The main jump is lighting paraffin – a fuel used by many for heating, cooking and lighting.

In March last year, the cost of paraffin was R8.45/l. Given the projected increase of R1.22/l for this fuel, the price could reach R13.19/l in March 2022 (from the current price of R11.97/l), representing a whopping 56% annualized on-year .

While the expected increases are significant, Dawie Roodt, chief economist at Efficient Group, notes that they are consistent with current economic data.

“These increases are not unexpected; they are supported by the numbers, especially those related to international oil prices,” Roodt said.

“Of course we are concerned about these expected increases, which will undoubtedly put more pressure on already stretched consumers.

“These significant increases also confirm our belief that a fuel price review is needed to determine if there are areas in the current pricing model that could be revised to mitigate rising costs,” said AA.

The organization is calling on Finance Minister Enoch Godongwana not to increase levies on the general fuel and road accident fund in his budget speech next week.

The organization is also pushing for a fuel price review to determine if there are factors that could reduce rising fuel costs.

It has a petition calls on the government to consider this.

The petition signatures for #ReviewTheFuel will be submitted to the Treasury Secretary ahead of the Feb. 23 budget speech.

compiled by Narissa Subramoney

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