How petrol prices are calculated in South Africa

The Minister of Mineral and Petroleum Resources, Gwede Mantashe, has announced the adjustment of fuel prices based on current local and international factors with effect from October 2.

South Africa’s fuel prices are adjusted monthly, 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, like shipping costs.

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According to the Fuel Industry Association of South Africa, the petrol retail price is regulated by government and is adjusted every first Wednesday of the month.

The association states that the calculation of petroleum product prices, petrol, diesel, and illuminating paraffin, is done daily by the Central Energy Fund (CEF) on behalf of the Department of Mineral Resources and Energy (DMRE).

The monthly price change is essentially an average over a prior period applied to the future month. This means that South African fuel prices lag international prices by one month.

The association states that the petrol pump price is comprised of a number of price elements which can be divided into international and domestic elements. The international element, or Basic Fuel price (BFP), in its simplest form, is based on what it would cost a South African importer to buy petrol from an international refinery and transport the product, meeting local specifications, to South African shores.

“To this is added various government regulated taxes and levies and allowable margins to arrive at a fully built up price for petrol. Within this price build-up are charges for NERSA operations and allowable distribution charges based on magisterial district zoning,” states the association.

The diesel retail price is not regulated, although the DMRE presently publishes a wholesale list price for diesel.

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The main reasons for the fuel price adjustments are due to:
• Crude oil prices: The main contributing factor is the increased production from major oil-producing countries despite lower demand concerns.
• International petroleum product prices: The average international petroleum product prices decreased on average, in line with the lower oil prices, during the period under review.
• Rand/US Dollar exchange rate: The Rand appreciated on average, against the US Dollar during the period under review.
• Implementation of the Slate Levy: In line with the provisions of the Self-Adjusting Slate Levy Mechanism, a slate levy of zero cents per litre remains in the price structure of petrol and diesel with effect from October 2.
• Octane differentials between 95 and 93 petrol grades: In line with the working rules to determine the Basic Fuels Prices (BFP), the differential between 95 and 93 octanes is adjusted on the first Wednesday of each quarter.

Based on current local and international factors, the fuel prices for October 2024 will be adjusted as follows:
• Petrol 93 (ULP and LRP): One hundred and six cents per litre (R1.06/l) decrease.
• Petrol 95 (ULP and LRP): One hundred and fourteen cents per litre (R1.14/l) decrease.
• Diesel (0.05% sulphur): One hundred and fourteen cents per litre (R1.14/l) decrease.
• Diesel (0.005% sulphur): One hundred and twelve cents per litre (R1.12/l) decrease.
• Illuminating Paraffin (wholesale): One hundred and eleven cents per litre (R1.11/l) decrease.
• SMNRP for IP: One hundred and forty-eight cents per litre (R1.48/l) decrease.
• Maximum LPG as Retail Price: Twenty-three cents per kilogram (R0.23/kg) increase.

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