Fuel prices in South Africa are primed for a fifth-consecutive increase this coming March.
The good news, though, is that they are unlikely to rise as dramatically as they did in February.
Mid-month data from the Central Energy Fund (CEF) indicates that petrol could go up by 26c a litre at the most, while diesel is expected to rise by no more than 8c a litre.
Fluctuating international petroleum product prices dealt the biggest blow to local fuel prices during the two weeks under review.
On 31 January, the black gold was trading for $76.76 a barrel, sinking to $74.29 a barrel by 6 February, rising to $77.00 a barrel by the 11th, before settling at $75.02 a barrel by the 13th.
The unpredictable movements led to an under-recovery in domestic fuel prices of 21-34c a litre for petrol, and 9-16c a litre for diesel.
Meanwhile, a slight recovery in the rand/US dollar exchange rate had a positive impact on March’s expected price adjustments.
The rand swapped hands with the greenback at an average of approximately R18.70/dollar on 31 January, rising to a high of R18.82/dollar by 3 February before dipping back down to around R18.60/dollar by the 13th.
This saw an over-recovery of 8-9c a litre in domestic fuel costs for the first two weeks of the month, depending on the grade.
As a result of these ever-changing inputs, fuel prices in South Africa in March are anticipated to be adjusted as follows:
- Petrol 93 – Increase of 26c a litre
- Petrol 95 – Increase of 13c a litre
- Diesel 0.05% – Increase of 8c a litre
- Diesel 0.005% – No change
It should be noted that these predictions are not the official changes that will be made by the Department of Mineral and Petroleum Resources next month.
The final changes could be higher or lower as they are also subject to potential changes in the Slate Levy, taxes, transport and storage costs, or wholesale and retail margins
Fuel tax fears
March’s anticipated fuel price adjustments could be further exacerbated by an expected increase in fuel taxes.
Auditing and consulting firm Deloitte believes that fuel taxes are likely to rise in Finance Minister Enoch Godongwana’s upcoming Budget Speech, set to be held on 19 February.
The General Fuel Levy (GFL) is currently set at R3.84 per litre for diesel and R3.96 per litre for petrol, accounting for approximately 19% and 18% of the prices of these fuels, respectively.
The Road Accident Fund (RAF) Levy, on the other hand, is pegged at R2.18 per litre across the board, representing an average 10% share in local fuel rates.
Since 2021, Godongwana has kept the GFL and RAF Levy static to reduce the burden these charges place on cash-strapped consumers.
National Treasury estimates that motorists were spared in excess of R4 billion in fuel taxes in the 2023/24 financial year alone through this initiative.
However, market conditions have improved since then, leading to reduced inflation and three consecutive interest rate cuts.
In the mid-term budget speech on 30 October 2024, Godongwana also highlighted that government expected to take a R13.4-billion revenue hit from fewer fuel levy collections due to lower demand.
An astounding 1,333 million litres less fuel was consumed in 2024 compared to 2023, which was attributed to reduced load-shedding and a transition to alternative energy sources such as solar power.
The lower levy collections and declining revenue are likely to be key motivators for raising the GFL and RAF Levy in 2025.
Likewise, the Carbon Fuel Levy – which is included as an add-on to the GFL – is all but guaranteed to go up this month, as it did in 2024.
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