Energy crisis: Double whammy as fuel price and load shedding hit South Africans in the pocket

South Africa is in the midst of an energy crisis with Eskom blackouts on the one end and the price of fuel rocketing on the other.

After this week’s suffocating increase, consumers will be paying almost 75% more for fuel than in 2020.

From tomorrow, the pump price for 95-octane petrol is expected to rise by another R2.57 per inland litre to R26.74, while diesel climbs by R2.30 a litre. Illuminating paraffin will jump by R1.66. Seventy-five cents of the increase will be relieved by a halving of the fuel levy for July.

The barrage of fuel price hikes and blackouts from Eskom is bringing small businesses to their knees. But

Eskom faces a huge challenge as it becomes even more expensive to keep the lights on. The utility confirmed that it buys diesel at the same price everyone else does and, at a staggering nine million litres a day to keep the emergency gas turbines going, it would have to fork out an additional R620 million this month.

Eskom’s current financial state is no secret and consumers will have to pay for that, too, either via tax, or calamitous hikes in the unit cost of electricity later this year.

A community shopping centre in Sandton presently spends about R60,000 over a weekend to keep tenants’ lights on, the landlord said, and small business owners just cannot afford to fuel their own generators anymore.

ALSO READ: SA economy hammered by load shedding, municipal tariffs and fuel prices

Democratic Alliance councillor Simon Lapping hand-delivered a proposal to Eskom last month to beg for mercy – and electricity – for the companies in his ward that, he said, were starting to wilt, one by one, and the jobs that go with them.

To date, his handwritten letter to Eskom chief executive André de Ruyter has gone unanswered.

On the brighter side, economist Dawie Roodt said that he expected this month’s increase to be the last steep hike in fuel prices. He said:

“There’s still the 75 cents levy to be added back but, apart from that, we should see a slow downward movement later this year as the oil price starts to ease back and the rand gains some strength.

“I think the worst of the hikes may be over after July.”

ALSO READ: July petrol price: Brace yourself, another massive hike coming this week

Yet the Automobile Association said that if the Russian war in Ukraine was not resolved soon, the economy might be in for a further hammering. The AA also said: “In addition to the increases to the basic fuel prices, the R1.50 relief off the general fuel levy given by the government for May and June was halved for July, which adds to the increases.

“This means the increase of R1.82 to 95ULP is effectively an increase of R2.57.”

This, and other increases announced today, will “negatively impact on all South Africans and will, undoubtedly, play a big role in the economy going forward”.

It’s also latent inflationary pressure that the country must guard against, said Roodt, so the Reserve Bank would have to urgently consider raising interest rates. “Measures must be taken to simmer the impact of inflation.”

The AA has also called for a full review of the fuel price. “There is a need to interrogate all the components of the fuel price, to determine whether all these components are still necessary in the existing formula and to establish if the current calculations of these components are correct.”

Roodt said the only way to solve SA’s energy crisis was for government to step out of the power business and allow private enterprise to knock the grid into shape.