Here are the hidden costs that add to what you’re paying for a litre of fuel in South Africa
- Fuel prices seldom decrease for South Africans.
- Motorists are paying R1.50 more per litre of fuel compared to the price a year ago.
- The Automobile Association breaks down the cost of fuel per litre.
Fuel prices are a sore point for South Africans. Even when prices come down by a significant margin, it is guaranteed to only go up twice as much in the next month or two.
Despite high fuel prices worldwide, South Africans also bear the brunt of not just one but several taxes added to the standard fuel price. Motorists are paying around R1.50 a litre more for fuel in May 2023 than at the same time last year, according to the Automobile Association of South Africa (AA).
The increases to 93ULP inland and 95ULP at the coast see spikes of around 7% in petrol over 12 months. The wholesale price of diesel over the same period decreased from R21.99 per litre in May 2022 to R20.15 in May 2023 inland and from R21.34/l in May 2022 to R19.43/l in May 2023 at coastal rates, says the AA.
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Fuel prices are unlikely to come down significantly any time soon.
The decrease in the diesel price must, however, be seen against the backdrop of significant fuel prices between June and December 2022 when the price of a litre of diesel inland reached R25.40/l in July 2022, says the organisation. Similarly, petrol prices during this period (June – December 2022) remained high, with ULP95 (inland) reaching R26.74/l in July 2022 and ULP95 at the coast reaching R26.09/l in the same month.
In May 2022, a litre of ULP93 inland cost R21.51, while the same fuel cost R23.01/l in May 2023. A litre of ULP95 at the coast cost R21.09 in May 2022; in May 2023, that fuel now costs R22.62/l.
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So what exactly are we paying for? South Africa’s fuel price is comprised of many different elements, some of which make fuel in the country more expensive than in neighbouring countries to which South Africa exports. To understand the factors comprising a litre of petrol locally, the Automobile Association (AA) publishes a fuel price breakdown to give consumers a snapshot of the composition of a litre of petrol inland and at the coast.
The Automobile Association breaks down the cost of fuel per litre.
The figures are based on 93 octane fuel (inland) and 95 octane (coastal).
The costs are calculated using May fuel price data which incorporates the two main taxes paid on every litre of fuel, namely the General Fuel Levy (GFL) and the Road Accident Fund (RAF) levy. Increases to these levies are usually announced in February during the finance minister’s annual Budget speech, and come into effect in April. In 2023, no additions to these levies were affected, but they remain significant contributors to the overall fuel prices.
In May 2023, the total cost of the two primary levies stands at R6.14 (R3.96 for the GFL and R2.18 for the RAF levy), which is levied on every litre of petrol sold in the country. The GFL is lower for diesel at R3.82, while the RAF levy remains the same.
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Increases in fuel prices also mean an increase to goods transported across the country as operators recover these higher input costs through increases passed on to consumers.
The AA reiterates its position of mid-April 2021 when it stated to the Parliamentary Portfolio Committee on Mineral Resources and Energy that several steps could be taken to mitigate rising fuel costs in the country.
Among these are a recalculation and audit of the existing elements within the fuel pricing model, and a reduction of the costs of the Road Accident Fund (RAF) to motorists through:
- Better management and governance of the RAF
- Improved road safety to reduce demand on the RAF
- Better traffic policing
- Safer Roads/Safer Drivers/Safer Cars/Better Post-Crash Intervention
- Better pedestrian safety education
- Privatisation of the RAF, or at minimum, semi-privatisation of claims management
The association further notes that the misappropriation of funds and corruption are siphoning money away from the GFL, which could be used better if appropriately allocated and accounted for. Investments in alternative forms of public transport, and investments in improving Transnet, are vital.
Fuel price breakdown May 2023
The fuel price in South Africa is comprised of four main elements:
- The GFL – R3.96 per litre
- RAF Levy – R2.18
- Basic Fuel Price (BFP – freight and insurance costs, cargo dues, storage, and financing) – R12.63
- Wholesale and retail margins and distribution and transport costs – currently up to R4.24 per litre
As of May 2023, the GFL is R3.96, representing around 17% of every litre of petrol sold in South Africa. The RAF levy priced at R2.18 a litre represents approximately 11% of every litre of fuel sold.
Combined, the two main levies will deliver around R138 billion in revenue to the government, with approximately R90 billion going to the GFL, with the rest going to the RAF. The GFL contribution goes directly to Treasury and can be used for any purpose government determines.
In South Africa, the fuel price is adjusted on the first Wednesday of every month. It is determined by two main factors: The rand/US dollar exchange rate (how fuel is purchased) and international petroleum prices (how much the fuel costs to buy).
The price of fuel is a sore point for South Africans.
The Basic Fuel Price (BFP) is calculated based on costs associated with shipping petroleum products to South Africa from the Mediterranean area, Arab Gulf, and Singapore. These costs include insurance, storage, and wharfage (the price to harbour facilities when off-loading petroleum products into storage). The current BFP is around R12.63 (ULP93 inland).
Other costs associated with the petrol price include transport costs (from the harbour to inland areas, which accounts for the difference in price between coastal and inland prices), customs and excise duties (sin tax), retail margins paid to fuel station owners (currently R2.42 on every litre sold), and secondary storage costs. These costs presently total R4.24/l for inland petrol and R3.52/l for coastal petrol.
Using the current data, filling a 50-litre tank of fuel inland (93ULP) will cost R1150.50 inland and R1130/l (95ULP) at the coast – R76.50 more now than a year ago.