South African motorists can look forward to slight relief at the pumps this coming Wednesday with a price cut on the cards for all fuels in the country.
Petrol prices are expected to fall by a maximum of 15c per litre on 7 August, with diesel to potentially see a reduction of as much as 27c per litre, shows the latest data from the Central Energy Fund (CEF).
These adjustments come courtesy of a steadily appreciating local currency during the month of July.
From 28 June to 1 August, the average rand/US dollar exchange rate fluctuated between a low of R18.12/dollar and a high of R18.30/dollar, considerably lower than the R18.45-18.80/dollar range it tracked in the month before.
This improvement contributed to an over-recovery in domestic fuel prices of between 13-14c/litre.
International oil prices also experienced a noticeable decline over this same period. On 28 June, one barrel of Brent Crude oil traded for $86.41, falling to $79.52 by 1 August.
This caused a slight retreat in international petroleum product prices, resulting in an under-recovery in the prices of 93 unleaded petrol by 4c/litre and an over-recovery in 95 unleaded petrol of 1c/litre, as well as an over-recovery in all grades of diesel of between 2-13c/litre.
These inputs accounted for, fuel prices in South Africa on Wednesday are expected to be adjusted as follows, as per the CEF:
- Petrol 93 – Decrease of 10c a litre
- Petrol 95 – Decrease of 15c a litre
- Diesel 0.05% – Decrease of 27c a litre
- Diesel 0.005% – Decrease of 16c a litre
It must be noted that these predictions are not the official changes that will be made by the Department of Energy for August, which may be higher or lower as they also take into account any potential changes in the Slate Levy, taxes, transport costs, or wholesale and retail margins
South African fuel refineries coming back online
South Africa currently imports approximately 70% of its fuel requirements from international suppliers, reflecting a considerable breakdown in refining capacity from 2019, when the country relied on imports to satisfy only 30% of demand.
The Department of Minerals and Petroleum Resources (DMPR) recently revealed that it will therefore embark on a journey to revive the fuel production industry to its former glory.
In a recent meeting between the DMPR and the Fuels Industry Association of South Africa (FIASA), the Minister of Minerals and Petroleum Resources told FIASA that his department is in the process of reinstating two of the nation’s largest fuel refineries – the Sapref plant in Durban and PetroSA’s gas-to-liquids refinery in Mossel Bay.
“The minister indicated that they are bringing [the Sapref refinery] back, and also the PetroSA refinery is going to be brought back,” said FIASA Executive Director Fani Tshifularo.
These facilities have the potential to collectively produce as much as 225,000 barrels of petroleum per day at full capacity.
“We indeed support such initiatives, particularly if there are investors who are interested in putting their money into those projects, because it will help a country like South Africa where the importing markets are far away from us,” said Tshifularo.
He noted that it takes an average of three weeks for one shipment of fuel to be shipped from other countries to South Africa.
“If we have got our own refineries, at least we can store crude oil in large quantities and we don’t have to wait for finished products to land in our own ports,” he said.
Alongside the revival, the Sapref and PetroSA plants will be upgraded to produce cleaner fuels which could benefit consumers in more ways than one.
Fuels currently sold in South Africa are not up to scratch with international standards which has seen many modern cars, especially hybrids and petrol autos that adhere to the latest European emissions regulations, not being introduced to our roads.
In the past, automakers including Ford, Toyota, and VW have stated that they can’t launch their most cutting-edge products in the country due to poor fuel standards as they would be unable to perform at their peak.
These “clean” fuels are in the pipeline to be introduced in 2027, said Tshifularo.
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