It’s been over six years since Department of Mineral Resources and Energy (DMRE) announced its intention to instate a price cap on petrol 93 and the plans have yet to come to fruition.
In late 2018, then-Minister of Energy Jeff Radebe said that a proposal to limit the maximum price of petrol 93 was being developed and would be presented to industry stakeholders by or before January 2019.
The deadline came, and went, with no plans of such nature making it into the public eye. Whether the proposal was crafted and rejected by stakeholders behind closed doors we don’t know, though it was thought that the price cap was a thing of the past.
That was until 2022, when discussions were kickstarted again when the DMRE gazetted its intention to introduce a petrol 93 price cap.
At the time, fuel prices were at record-high levels in South Africa and the department insisted that a price cap would help alleviate the burden on cash-strapped motorists, and it gave the public 30 days to submit their comments on the proposal.
Fast forward another year, now June 2023, the DMRE confirmed to TopAuto that it received comments from approximately 400 stakeholders which were consolidated into a single report for perusal by the relevant parties.
“The report is undergoing [an] internal approval process and will be made public once this process is complete,” said the DMRE.
“It would be premature to talk about the introduction of the price cap at this stage as the report is not finalized yet.”
Now in January 2025, well over six years since the cap was first mentioned, the alleged report has yet to be made public and the petrol 93 maximum price yet to be instated.
TopAuto sent inquiries to the now rebranded Department of Mineral and Petroleum Resources (DMPR) surrounding the proposed price cap, such as whether it will still be introduced and what the general consensus among the 400 stakeholders was.
Unfortunately, we received no response.
Fuel Price Intervention Plan
It’s possible that a petrol 93 price cap will form part of the Fuel Price Intervention Plan (FPIP) currently being investigated by the DMPR.
During the formal opening of Parliament in July 2024, President Cyril Ramaphosa said that the new Government of National Unity would undertake a comprehensive review of the current fuel price calculation to determine areas in which the burden on motorists can be reduced.
A month later, a Ministerial Task Team was appointed to “review the fuel pricing formulae holistically.”
The finer details of this review have yet to be announced, however, several suggestions have been mooted in recent years surrounding methods to slash the country’s sky-high fuel rates, among them the reduction of taxes and levies, a revision of industry margins and transport costs, completely deregulating petrol prices, bi-weekly price updates, and, of course, the aforementioned cap.
Experts have warned consumers not to get their hopes up too quickly.
At present, one of the largest contributors to the country’s coffers is fuel taxes and levies, which generated over R93 billion for Treasury in the 2023/24 financial year alone.
These taxes are also among the easiest to collect. Motorists rarely think about them when paying for fuel at service stations, unlike how they can see deductions on their paycheque at the end of the month, leading to fewer public protests.
Additionally, should government compromise this revenue stream it will have to make up for it somewhere else, such as an increase in VAT and income tax, which will impact the poorest citizens who may not even own vehicles the hardest.
Likewise, industry margins and transport costs currently occupy a very small portion of the total fuel price calculation.
They are used by service station owners to compensate employees as well as cover other expenses such as property, electricity, and water bills.
Further reducing these could be met with fierce backlash and unintended consequences, such as job cuts and service station closures.
A complete deregulation of petrol prices, like we have with diesel, may not achieve these goals, either.
Deregulation will allow fuel retailers to independently set the prices of petrol 93 at their stations, allowing them to undercut competition to lure paying customers to their pumps.
However, the Liquid Fuel Wholesalers Association said that evidence from other countries where fuel prices have already been deregulated suggests that retailers will not cut prices if the fuel is deregulated as they operate on scant margins as it is.
The prices may not necessarily go up, but “we don’t have a clear understanding of how deregulation is going to affect the economy,” said the association.
The fuel cap and more regular price updates may thus be two of the few avenues the FPIP could explore.
As per the South African Reserve Bank, adjusting fuel prices every two weeks instead of once a month “would improve the responsiveness of the fuel price and reduce the burden on the slate levy to adjust for short-term imbalance.”
The introduction of a price cap on petrol 93, meanwhile, may only benefit a small portion of motorists as this grade only accounts for a meagre 20% of all petrol sold in South Africa.
The South African Petroleum Industry Association has called on government to investigate the cap “in a spirit of transparency and on condition that relevant consultations with industry is observed, taking into account the interests of all role players.”
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