Fuel price red flag: April could see yet another price hike

Early indications based on the latest daily snapshot from the Central Energy Fund (CEF), show that motorists could be in for yet another hefty knock at the fuel pumps in April.

This according to BusinessTech, which on Monday 6 March 2023 reported that the latest CEF data indicates that the under-recovery in fuel prices seen in February, has carried over to March.

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Fuel price red flags: Under-recovery, weak rand, oil price

While fuel prices are largely determined by the rand/dollar exchange rate and international oil prices. At present, both the weaker rand (for diesel and petrol) and oil price (for petrol) are contributing to higher costs.

• At the time of publishing the rand/dollar exchange rate is R18.14/$.
• At the time of publishing the brent crude oil price is $82.86 a barrel.

At the end of the first Friday in March, petrol prices show an under-recovery (this potential hike) of 56 cents per litre, while diesel is showing an under-recovery of 6 to 9 cents per litre. This under-recovery across the board is likely to translate into a sharp price increase at the pumps.

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March fuel price hike: Motorists already going nowhere slowly

The early warning signs of a fuel price hike in April come at a time when motorists are still fuming at the pumps about the March fuel price hike.

The official fuel price adjustments which came into effect from 1 March 2023 saw petrol and diesel prices increase by 127 cents and 30 cents per litre respectively.

This is how the price changes are currently reflecting at the pumps, according to BusinessTech:

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Believe it or not: It could have been worse…

Although this comes as cold comfort to already over-stretched South African consumers trying to keep their heads above water, the pain at the pumps could be even worse.

In his Budget Speech on Wednesday 22 February, Finance Minister Enoch Godongwana announced that National Treasury will not increase the General Fuel Levy and Road Accident Fund (RAF) levy for 2023.

The General Fuel Levy is currently pegged at R3.94 per litre, and the RAF levy is at R2.18 per litre of 95 petrol (inland pricing). Combined, they add R6.12 to every litre of petrol and diesel sold in the country, as per BusinessTech.

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Diesel Fuel Levy Refund

In his Budget Speech, Godongwana also announced government will extend a diesel fuel levy refund to food manufacturers for a period of two years. This will be effective from 1 April 2023 to 31 March 2025.

“To ease the impact of the electricity crisis on food prices, the refund on the Road Accident Fund levy for diesel used in the manufacturing process, such as for generators, will be extended to manufacturers of foodstuffs. This takes effect from 1 April 2023 for two years.”