The Minister of Mineral Resources and Energy, Mr Gwede Mantashe, announces the adjustment of fuel prices based on current local and international factors with effect from the 1st of December 2021.
South Africa’s fuel prices are adjusted on a monthly basis, informed by international and local factors. International factors include the fact that South Africa imports both crude oil and finished products at a price set at the international level, including importation costs, e.g. shipping costs.
The main reasons for the fuel price adjustments are due to:
(1) The contribution of the Rand/US Dollar exchange rate The Rand depreciated, on average, against the US Dollar (from 14.72 to 15.85 Rand per USD) during the period under review when compared to the previous one. This led to higher contributions to the Basic Fuel Prices of petrol, diesel and illuminating paraffin by over 34.00 cents per litre.
(2) The increase in the prices crude oil The average Brent Crude oil price increased from 82.50USD to 83.00USD per barrel during the period under review. The key driver is the higher global demand recovery amid a weaker supply response from non-OPEC and other oil producers. There is a mismatch between demand and supply, i.e., there is more demand for oil products than the market can supply. The USA and other major oil consumers are coordinating efforts to try to lower high prices by releasing oil from their inventory stocks, while OPEC and Non-OPEC members are refusing to increase oil production to match the global recovery demand. The release of millions of barrels of strategic oil reserves by the US Government has done little to dampen the oil prices. Recent Global concerns over the new COVID variant are beginning to dampen oil demand, resulting in lower oil prices.
(3) The Petroleum Products Prices The movement in international refined petroleum product prices followed the increasing trend in crude oil prices. This led to higher contributions to the Basic Fuel Price of petrol by 1.50 c/l, diesel by 5.31 c/l and illuminating paraffin by 1.21 c/l, respectively. It is important to appreciate that fuel prices are soaring worldwide due to persistently high crude oil prices. Record pump prices have been experienced in many other countries. The Department is aware of the inflationary nature of the high global fuel prices and the impact on the transport costs for commuters.
(4) RAS Industry Margins Annual Adjustments In line with the application of the Regulatory Accounting System (RAS) the Minister of Energy approved a net increase of 17.84 c/l in the annual margin adjustments on petrol and a net increase of 8.20 cents per litre on diesel and illuminating paraffin wholesale prices, with effect from the 1st of December 2021.
(5) Implementation of the Slate Levy An increase of 26.30 c/l (i.e. from 15.36 c/l to 41.66 c/l) will be implemented into the prices structures of petrol and diesel in line with the Self-Adjusting Slate Mechanism rules effective from the 1st of December 2021. The combined cumulative Slate balances of petrol and diesel amounted to a negative R4.689 billion at the end of October 2021. The Slate Levy is used to compensate the industry for cumulative under recovery in line with the Self-Adjusting Slate Mechanism Rules.
Based on current local and international factors, the fuel prices for December 2021 will be adjusted as follows:
- Petrol (both 93 and 95 ULP & LRP): Eighty-one cents per litre (81.00 c/l) increase
- Diesel (0.05% sulphur): seventy two point five cents per litre (72.50 c/l) increase;
- Diesel (0.005% sulphur): seventy four point five cents per litre (74.50 c/l) increase;
- Illuminating Paraffin (wholesale): forty-two point two cents per litre (42.20 c/l) increase.
- SMNRP for IP: fifty-six cents per litre (56.00 c/l) increase.
- Maximum LPGas Retail Price: one hundred and eighty-three cents per kilogram (183.00 c/kg) increase; and
The fuel prices schedule for the different zones will be published on Tuesday, the 30th of November 2021.
Source: Government of South Africa