International oil prices could be the main contributor to an expected decrease in diesel and petrol prices in June. Photo: Neil McCartney
Despite the rand plummeting to a record-low last week, lower fuel prices are on the horizon for June. This comes after South African motorists have had to navigate a hard road of continuous petrol price hikes in recent months.
Mid-month data from the Central Energy Fund (CEF) shows an over-recovery in petrol prices, which could translate into a decrease next month of between R1.11 and R1.13 per litre.
The data also points to an over-recovery of between R1.27 per litre for 50ppm and R1.36 per litre for 500ppm for diesel.
A consistent decline in global oil prices since the start of April has been the main factor contributing to next month’s expected lower fuel prices.
ALSO READ: Fuel price: Good news for diesel, but no joy ride for petrol heads in May
Fuel prices are primarily governed by the rand/dollar exchange rate and international oil prices.
Despite a slight recovery to date, the rand reached an all-time low of R19.52 against the greenback on 12 May.
This against the backdrop of crippling rolling blackouts and claims by US ambassador to South Africa Reuben Brigety that the country supplied arms to Russia in December 2022.
Brent crude oil currently sits at $75.24 (about R1400) a barrel after it fell below the $100 mark earlier this year.
ALSO READ: Consumers will suffer as Rand falls to record low
According to the Department of Energy, the CEF’s daily snapshots on the over-recovery and under-recovery of the basic fuel price do not encompass other possible modifications,
The department determines these adjustments, which consider various factors such as slate levy adjustments or retail margin changes whereby the controlled prices are changed on the first Wednesday of each month.
In its analysis of the fuel price trend in 2023, FNB explained that within the total price of fuel domestically, taxes and levies make up 31%, with the general fuel levy and Road Accident Fund (RAF) levy accounting for the largest portion.
“The general fuel goes to National Treasury, and the government is free to utilise this levy in any manner it deems fit. The RAF levy can only be utilised for road accident claims,” FNB said.
In his Budget Speech on 22 February, Minister of Finance Enoch Godongwana announced that government will extend a diesel fuel levy refund to food manufacturers for a period of two years. This will be effective from 1 April 2023 to 31 March 2025.
“To ease the impact of the electricity crisis on food prices, the refund on the Road Accident Fund levy for diesel used in the manufacturing process, such as for generators, will be extended to manufacturers of foodstuffs.”
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