This is how much you’d pay for petrol without the South African government

Motorists would pay around R13 per litre for petrol and around R15 per litre of wholesale diesel if it weren’t for dealer margins and the many fuel taxes applied to every litre of fuel in South Africa.

That is because the government’s fuel levy relief has come to an end, effectively adding R3 to petrol and diesel prices even before the slate levy was reintroduced.

This self-adjusting mechanism was formally implemented in 2009 to help the fuel industry recover incremental under-recoveries incurred while importing and supplying petroleum products.

Beyond the three major levies imposed on every litre of fuel, namely the General Fuel Levy (GFL), the Road Accident Fund Levy (RAF Levy), and the Slate Levy, there are three additional levies and taxes affecting local fuel prices.

These include the IP Tracer levy, which is applied only to diesel, customs and excise duties, and the Petroleum Products levy.

It must be noted that these are all relatively minor, and to a certain extent negligible, adding R0.048 to every litre of diesel.

The big three, on the other hand, add R7.68 to every litre of petrol sold in South Africa, and R7.55 to every litre of diesel.

Together, these taxes and levies add R7.72 per litre of 95 and 93 petrol, and an additional R7.60 per litre to either grade of diesel.

Below is a breakdown of each of the taxes and levies applied to fuel in South Africa:

Without these, inland residents would be spending only R18.38 per litre for petrol 95 right now, and only R18.07 per litre for wholesale 0.005% diesel.

This is nowhere near the R13 and R15 basic fuel prices for petrol and diesel, but there is a very good reason for this.

Not just taxes

Because petroleum companies and fuel retailers are in the business to make money and don’t just supply South Africans with fuel out of the goodness of their hearts, they need to take their cut as well.

Additionally, transporting and storing fuel is also not free, which adds a few cents more per litre, while service costs, zonal pricing, and even pump rounding add to the total price per litre motorists end up paying.

There are several market-related costs of importing large quantities of liquid fuel from overseas refining centres and local distribution.

These include a 67c per litre wholesale margin for petrol and 99c per litre for diesel, storage and handling costs of 39c per litre and distribution costs of 19c per litre across the board.

Due to the costs associated with transporting fuel to inland retailers, a 91c-per-litre zone differential is also implemented, followed by a retail margin of R3.15 per litre of petrol.

Altogether, these factors add around R6 per litre to the petrol pump price, and around R3 per litre for diesel.

Below is a breakdown of the additional fees added to every litre of petrol and diesel sold inland in South Africa:

To encourage competition between fuel retailers, the South African government does not regulate the dealer margins for diesel.

This is why diesel prices for both grades differ from fuel station to fuel station, which has led to questions over pricing practices during crises, as was experienced earlier this year.