CAPE TOWN - The Central Energy Fund (CEF) has announced that South Africans may have to brace themselves for another petrol hike in October.
This could mean that motorists may pay as much as R17 a liter for fuel.
The main reasons for the increase, according to the CEF, is increasing international petrol prices and a continued weaker rand.
The report states that there is a R1.12 under-recovery for 93 and 95 grades of petrol and an under-recovery of R1.38 for diesel. If these levels are to continue motorists could pay a staggering R17 a litre for 95 octane fuel, and one cent under R17 for 93 octane.
Govt’s petrol price 'gift' will come back to bite us - experts
In early September the Energy Department said that they would keep fuel prices unchanged for September, except for 4.9 cents a litre on petrol to cover a previously agreed pay rise for forecourt workers.
Economist Dawie Roodt, however, said that this will come back to haunt motorists over the next few months.
“There’s a set formula,” he explained, “that the energy department and economists use to calculate the fuel price on a monthly basis, taking into account the ruling international price of crude oil and the value of the rand against the dollar.
The CEF had at the time predicted a price rise of 28 cents a litre for petrol and 31 cents a litre for diesel.
Roodt said it was “interesting” that the energy department hadn’t explained how it managed to keep the prices so far below what they should have been, had the conventional calculations been used.
“I can only assume they drew on crude oil reserves that had been hidden somewhere or that they had a spare pot of cash somewhere in the ministry,” he said.
Neil Roets, head of one of the largest debt counselling companies in South Africa, said that while the temporary reprieve was welcome, it would be unrealistic to look at this as a “gift from the government”.
“The harsh reality is that the South African economy is at one of its weakest points for a long time,” he said. “We are under pressure from a weakening currency, growing unemployment and now even the possibility of going into a recession.”
“Depending on how the rand performs over the next few months - and given that there is strong pressure by oil producing countries for a rise in the price of crude - we could be looking at double digit increases again in October and November,” Roets said.
Less fuel hikes if SA could produce its own oil
Energy Minister Jeff Radebe, yesterday, called for all impediments to shale gas exploration to be removed as part of the government's response to the record high in the fuel price.
Radebe told a debate in the National Assembly on the fuel price, the main driving factor was the current policies of the Organisation of Petroleum Exporting Countries (OPEC) and that there was little hope that the price of crude oil would drop.
"The price of crude oil will remain at current levels," Radebe said, adding that this posed a particular predicament for South Africa with its lack of reserves and reliance on imported cruel for 80 percent of its fuel needs.
South Africa, therefore, needs a multi-pronged approach to shield the economy from the impact of price hikes.
The reality which we must internalise is that South Africa has no crude oil reserves and as a result, we are heavily dependent on fuel imports for 80 percent of our country's fuel demands... Resolving this challenge is not a quick fix and that it requires a multi-dimensional policy approach."
Radebe said South Africa would be less vulnerable to price hikes if the country were able to produce its own oil and gas.
Therefore it was imperative to "remove any regulatory impediments to exploration and linked to this is the need to unlock the potential for shale gas in our country".