South African fuel prices comprise four main elements which make up the number we see at the pumps each day, and these have resulted in local fuels being more expensive than in neighbouring countries to which South Africa exports, according to the Automobile Association (AA).
These inputs are classified as:
- General Fuel Levy (GFL)
- Road Accident Fund (RAF) Levy
- Basic fuel price (BFP)
- Wholesale and retail margins, and transport and distribution costs
As of May 2023, the GFL is R3.96 and represents 17% of every litre of petrol or diesel sold in the country, whereas the RAF levy sits at R2.18 and accounts for a smaller 11%.
The GFL goes to treasury and is utilised for any purpose the government determines, whereas the RAF levy is allocated to the RAF as compensation for victims of road accidents.
“Combined, the two main levies will deliver around R138 billion in revenue to government, approximately R90 billion going to the GFL with the rest going to the RAF,” said the AA.
On top of these tariffs comes the BFP, which includes the shipping, insurance, storage, and wharfage costs associated with getting the fuel to domestic ports from the Mediterranean area, Arab Gulf, and Singapore.
Currently, the BFP is pegged at R12.63 for petrol 93 at inland rates.
Once in South Africa, additional costs in getting the liquids to filling stations arise in the form of transport costs, customs and excise duties, retail margins paid to station owners, and secondary storage costs.
Inland, all these inputs amount to a total of R4.24/litre, and in coastal areas, they come to R3.52/litre.
“Using the current data, filling a 50-litre tank of fuel (93ULP) will cost R1,150.50 inland, and R1,130 (95ULP) at the coast – R76.50 more now than a year ago,” said the AA.
Methods to curb rising fuel costs
Despite prices coming down from an all-time high of over R26/litre seen in mid-2022, motorists are still paying around R1.50 more per litre of petrol in May 2023 than at the same time last year.
“The decrease to the price of diesel must, however, be seen against the backdrop of significant price [increases] to this fuel between June and December 2022, when the price of a litre of diesel inland reached R25.40/l in July 2022,” said the association.
“Similarly, petrol prices during this period (June – December 2022) remained high with ULP95 (inland) reaching R26.74/l in July 2022, and ULP95 at the coast reaching R26.09/l in the same month.”
The association said there are several steps that can be taken to mitigate rising fuel costs in the country, all of which it presented to the Parliamentary Portfolio Committee on Mineral Resources and Energy in 2021.
Among these are a recalculation and audit of the existing elements within the fuel pricing model, as well as a reduction of the costs of the Road Accident Fund (RAF) to motorists.
The latter can be done through improved traffic policing, pedestrian safety education, better road safety measures, and the privatisation, or at least semi-privatisation, of the RAF, recommends the AA.
“The Association further notes that the misappropriation of funds and corruption are siphoning money away from the GFL which could be used better if allocated properly and accounted for,” it said.
“Investments in alternative forms of public transport, and investments in improving Transnet, are vital.”
Increases in fuel prices have far-reaching consequences over and above having less bang for your buck at the pumps. It also leads to an increase in prices of goods that must be transported across South Africa via road, which in turn ups the general cost of living in the country and reduces the finances individuals have left for other bills and expenses.
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