Tag: fuel

Week after week, there is always a petrol price hike threat to consumers in South Africa. Over a period of 10 years, the petrol price has fluctuated, increasing by a whopping 66% from R9,66 to R16,08. In the last 8 months of 2018, the price has increased from R14,42 to R16,08 inland.

The price hikes in 2018 alone placed a strain on the consumers and prompted the public outcry that led to the subsequent intervention by the government. The Department of Energy intervened after the Automobile Association (AA) of South Africa anticipated a drastic 23c to 25c per litre fuel price increase for the 5th of September 2018. The intervention led to the fuel price only increasing by 4.5c per litre.

According to Central Energy Fund calculations, local consumers could be hit by another bombshell as early indicators are that the fuel price could rise by R1.14 a litre in October. Making matters worse is the shock of the recession and the threat of downgrades by rating agencies.

OLX believes this directly affect more than three thirds of their users. “While OLX prides itself for making it super easy to buy and sell almost anything, our main source of traffic is price-conscious car buyers,” says Diana Mjojo, Communications Manager at OLX South Africa. “With the fuel prices going up again, this is a trend we don’t see coming to an end any time soon and we’re concerned about how it affects our users.”

9 out of the top 10 search terms for 2018 on the OLX platform are for the Cars & Bakkies category. According to the company, the OLX car buyer is financially savvy. They are willing to accept higher mileage vehicles if it means the price of the vehicle is lower.

Mjojo says OLX users are willing to save as much money as possible during these economically hard times. “Users will often pick the practical option over luxury, which may include older models, if it means the vehicles are cheaper. Not only are they conscious about the price of the vehicle but about the petrol consumption as well,” says Mjojo.

OLX advises consumers who aren’t already buying their cars on the platform to consider doing so as that is a smart way to save and set yourself economically free. “Whether you are looking for your first car, need a car to match your muscles or upgrading, OLX is a central place for you. We work with car dealerships that list their approved cars on the platform,” adds Mjojo.

By Kaunda Selisho for The Citizen 

The nation will have to pull those belts a whole lot tighter with a projected increase of about R1.14 a litre of petrol.

There seems to be no end in sight for South Africa’s perpetual rise in fuel prices as the Central Energy Fund (CEF) has predicted yet another increase for the month of October.

The CEF report, released earlier this week, attributes the projected increase to a weaker rand and a higher international oil price.

The most recent hike was capped at 5c after government intervention but was dubbed a “once off” to provide citizens a short reprieve after sustained increases over five months in the lead-up to September.

According to the CEF’s calculations, early indicators estimate that the fuel price could rise by R1.14 a litre in October.

Fin24 calculated that the inland price of 95 octane petrol would rise to a possible record high of above R17 a litre, thus affecting food prices and transport costs.

Review of fuel levy ‘is possible’

By Bekezela Phakathi for Business Day

The possibility of reviewing the fuel levies downwards to ease the financial burden on motorists and consumers has not been ruled out, says President Cyril Ramaphosa.

“The fuel levy is part of fiscal architecture we have in our country … we have said we want to look at that … the fuel levy is precisely one of those we are looking at,” Ramaphosa said in parliament on Wednesday

“We are sensitive to the burden imposed on our people.”

The price of fuel recently went up to more than R16 a litre in inland provinces. The hikes are expected to have a ripple effect on the economy.

The price of a litre of petrol in SA has more than doubled in 10 years, while the levies increased from about R1.30 in 2008 to the current R5.30.

The fuel levy contributes close to R63bn annually to the fiscus. The Road Accident Fund levy accounts for R1.93 of the fuel price. Taxis and other public transport operators have already upped their fares in response to the increases.

Ramaphosa said any decision would have to weigh the advantages of reducing the fuel levy against the loss of revenue for the state, which will have an effect “on a whole lot of things”.

“It’s not as easy as snapping a finger and coming up with an answer … it’s one of those issues we continue to look at and seek solutions for.… We import a commodity we have no control of in terms of prices,” said Ramaphosa, during a question-and-answer session.

DA leader Mmusi Maimane had asked Ramaphosa whether there was a plan to reduce the fuel levy, which he called a “corruption tax”. “The RAF [Road Accident Fund] is declaring losses and money is being wasted. Is there a plan to reduce the fuel levy?” he asked.

Department of energy officials told parliament on Tuesday that any adjustment to the fuel levy could only take place in the next financial year.

The government has said before there is nothing much it can do to stem the fuel increases since the country imports the bulk of its requirements. The change in the price of petrol is typically a function of both changes in international exchange rates, particularly the US dollar-rand exchange rate, and the change in international crude oil prices.

Ramaphosa also answered questions on the unemployment crisis and the burning issue of land expropriation without compensation.

“Since 2009 I have heard about plans and summits, yet millions of South Africans are still unemployed,” said Maimane. “The definition of insanity is doing the same thing and expecting a different outcome or keeping the same people [in the cabinet] and expecting a different outcome.… Can we bring change so we can expect a different economic trajectory?”

Ramaphosa said the cabinet would soon announce details to stimulate economic growth, including finalising the Mining Charter and allocation of broadband spectrum.

“We want to unlock the levers that hold the economy back,” said Ramaphosa.

The president hit back at Maimane, saying: “I’ve not heard anything wise that you’ve said.… You are playing the people or the man, not the substantive issues that have to do with economic growth.”

Without land redistribution there would be no stability in the country, Ramaphosa said.

“Transformation means we must have redistribution of land because there was an injustice committed many years ago.… If you do not want stability then do not transform … but if you want stability then you must transform.… We will make sure that our country succeeds. Even the landowners must embrace this process,” he said.

OUTA calls for national fuel march

The Organisation Undoing Tax Abuse (OUTA) has called on all citizens to join the group, and other organisations including faith-based movements and taxi associations, to put pressure on government to reduce the fuel levy by R1.

At 10h00 on Tuesday 31 July, OUTA and other groups will gather in Church Square, Pretoria, to hand over a memorandum to the National Treasury, calling for the reduction in the general fuel levy.

“South Africans have suffered under the burden of high taxes, maladministration and corruption for far too long. The exorbitant increases in the fuel levy during the Zuma era can be linked to Government’s need to increase its revenue to cover the costs of corruption that have permeated our state and continue to cripple our economy. Government leadership needs to do the right thing and reduce the fuel price by R1, if they are serious about easing consumer pressure, ” says Ben Theron, OUTA COO.

Concerned citizens are encouraged to lend their voices and participate in sending this important message to Government, by assembling at Church Square in Pretoria Central on Tuesday 31 July. In addition, social media activists can change their profile pic in the build-up and on the day of the march. OUTA will be making images available on www.outa.co.za.

“OUTA is an a-political organisation, that encourages people and movements from all sectors, including parties and labour unions to join us on Tuesday,” adds Theron.

Who has our petrol?

Cash-strapped consumers face another hefty petrol hike as The Department of Energy announced on Monday that a litre of 95 octane petrol will cost R14.01 inland and R13.52 at the coast from Wednesday.

And if that is not enough, the Central Energy Fund board chairperson has said that the fund is still busy calculating how much SA lost when 10.3 million barrels from its strategic fuel reserve were sold off in 2015.

The Central Energy Fund (CEF) can not yet say what price SA paid for the controversial sale of 10.3 million barrels of the country’s strategic oil reserves, or who now owns the stock, according to the chairperson of its board Luvo Makasi.

The secret sale by the Strategic Fuel Fund (SFF) – which is a subsidiary of the CEF – took place in December 2015, at a time when oil prices were at a historical low point.

Speaking to Power98.7 radio host Onkgopotse JJ Tabane on Monday evening, Makasi said that the CEF was still investigating the sale.

Bloomberg reported last month that law firm Allen & Overy led an investigation into the sale, which included a recommendation that a financial analysis of the sale be conducted.

But the fact that the analysis was completed by embattled auditor KPMG SA has caused delays in making the report public.

READ: Energy Minister wants assurance on KPMG analysis of oil sale
Minister of Finance Malusi Gigaba last month advised all government departments and entities to review all work done by KPMG to ensure their audit processes had not been compromised.

First rotation, then sale

In March 2016, three months after the sale took place, then-energy minister Tina Joemat-Pettersson claimed in her annual budget vote speech that the fuel had not been sold, but rotated.

“In 2015, we issued a ministerial directive for the rotation of strategic stocks by the Strategic Fuel Fund and this has resulted in the increased revenue base for SFF, whilst at the same time maintaining stocks within our storage tanks for security of supply,” she said at the time.

READ: AG to probe R5bn ‘secret’ oil deal
But earlier this year new Minister of Energy Mmamoloko Kubayi admitted the strategic fuel stock had in fact been sold off.

During Monday’s interview, Makasi also acknowledged the stock had been sold and not rotated.

But he said the CEF board was only involved in the transaction “at the end”, adding the board only got wind of the sale when a “a good amount landed in our (bank) account”.

A loss

Makasi acknowledged the fuel had been sold in a “depressed market” at a time when international fuel prices were low.

“If you look at where the market was at the time the product was sold, you would then have to make an assumption that there would have been a loss.

“But what we are busy with now, is we are trying to quantify what was the actual loss to the state,” he said.

He promised the CEF would “come back to the public” with the full details of what the loss amounted to.

Asked if anyone would be held responsible for the secret sale – which took place without the knowledge of National Treasury – Makasi reiterated that the scale of the losses first had to be established.

READ: MPs demand answers on ‘illegal’ fuel stock sale
“Where there is a loss, the Public Finance Management Act puts a positive implication on the board of CEF and all its subsidiaries to investigate those instances,” he said.

“So there will be consequences. And when those losses are established, there will be consequences on all those involved in the process.”

Makasi appeared to imply that the CEF was also still investigating who bought the oil.

“The stock never left our tanks,” he said. “But the question of ownership therefore, that is what we are busy now debating.

“There was an element of sensation around. (But) was there cause for concern? Yes there was.”

By Jan Cronje for Fin24

Petrol price shock for motorists

Fuel prices are to rise sharply this week, mainly as a result of climbing oil prices and a slightly weaker local currency against the dollar.

The latest information from the Department of Energy on Tuesday (29 August) indicated that the price of gasoline 93 (ULP & LRP) in Gauteng is likely to increase by 57.8 cents per litre next week – Wednesday, 6 September 2017.

The price of diesel with a 0.005% sulphur content meanwhile, is expected to increase by 45.2 cents per litre, said independent economist Fanie Brink.

The economist pointed out that the price of Brent crude oil increased to an average of $51.70 a barrel over the past month compared to an average of $49.50 a barrel in July.

“This increase resulted in sharp rises in the average international price of gasoline by 54 cents per litre and an increase in the diesel price by 41.4 cents per litre,” he said.

The average R/$ exchange rate traded around R13.16 last month and was slightly weaker at R13.22 which resulted in a further increase of 3.8 cents per litre in both the gasoline and the diesel prices, Brink said.

South Africa’s economic woes are expected to continue into the last quarter of the year, according to CEO of Debt Rescue, Niel Roets, who said that all indications are that the rand will continue to weaken in the coming months, which will further increase the fuel price as well as the cost of all imported goods.

“Food inflation is also outstripping general inflation running at about 6.9%. Despite the bumper maize harvest, prices of all grains are actually expected to rise in the short-term because the new harvest prices will only feed through into the economy by next year,” Roets said.

“This (September) fuel price increase is going to hit consumers like a ton of bricks. If current trends continue we could see more of the same in October.”

Here’s what you can expect to pay in September:

Petrol (93) – R13.40
Petrol (95) – R13.63
Diesel – R11.72

Source: BusinessTech

BMI Research says SA will become increasingly dependent on imported fuels, as ageing refineries cannot supply the fuels modern cars need.

Allowing the government to set the petrol price once a month is keeping SA’s cars and fuels stuck in the past, BMI Research warned in a note released on Tuesday morning.

SA had to indefinitely delay its plan to introduce Euro V fuel standards in July because the profitability of local refineries is too low for them to recoup the investment required to upgrade their plants.

Since modern cars are increasingly designed to run on the cleaner fuels that SA’s ageing refineries cannot produce, the country’s dependence on imported petrol and diesel will grow.

“Increases to the new vehicle emissions tax last year will promote the sales of more modern and efficient vehicles. However, domestic refining capacity will be unable to meet the demand for higher-quality fuel,” the report said.

“As a result, SA will face a higher import burden for higher-quality fuel. This poses additional headwinds to domestic refiners due to the increasing competitiveness of fuel imports.

“A build-out in global products capacity has lowered the cost of imports, with production centres in Asia and Europe already upgraded to higher standards.”

BMI said one “flash of positivity” was Sinopec’s purchase of Chevron’s 110,000-barrels-a-day Cape Town refinery.

“The more risk-tolerant Sinopec already possesses experience in upgrading refineries to higher fuel standards in China and, whilst the potential investment in a higher-quality product slate is unlikely with Chevron as operator, Sinopec may view the upgrade as a longer-term opportunity within the country,” BMI said.

“However, upgrading existing capacity will nonetheless be expensive, with Chevron previously estimating the cost of upgrading the Cape Town refinery to be around $1bn.”

Source: Business Day

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