Government reassesses fuel pricing system to reduce costs

The South African government is taking steps to address the rising cost of living by reviewing administered prices, including fuel costs. Minister of Mineral and Petroleum Resources Gwede Mantashe revealed this initiative during the African Oil Week in Cape Town on Tuesday, highlighting the government’s awareness of the burden fuel prices place on citizens.

“We have already begun discussions about reducing administered prices, including the price of fuel and electricity,” Mantashe said.

“Included in the discussions are levies such as the general fuel levy and the Road Accident Fund levy.” This review comes when fuel prices, although recently declining, remain a significant contributor to inflation.

Recent fuel price adjustments

October brought some relief for motorists as the price of petrol and diesel dropped for the fifth consecutive month. From 2 October, motorists saw a decrease in all grades of petrol and diesel, with petrol 93 falling by R1.06 per litre and petrol 95 by R1.14 per litre. Diesel prices also decreased, with reductions of R1.14 for 0.05% sulphur and R1.12 for 0.005% sulphur.

Despite the decrease, the fuel price outlook remains uncertain, influenced by fluctuating international oil prices and the strength of the rand. A litre of 95 petrol, which cost R22.19 in Gauteng in September, now costs R21.05. On the coast, prices dropped from R21.40 to R20.26 per litre.

The Department of Mineral and Petroleum Resources attributed the price adjustments to both local and international factors.

“The average Brent Crude oil price decreased due to increased production from major oil-producing countries, despite concerns about lower demand,” the department said. Additionally, the rand’s appreciation against the US dollar during the review period further contributed to the decrease in fuel costs.

Diversifying South Africa’s Energy Mix

Mantashe emphasised that while lowering fuel prices is essential, the country needs a diversified energy mix to meet growing energy demands.

“As we continue to pursue the security of energy supply and address energy poverty, a diversified energy mix remains a requisite for our nation,” he said.

Mantashe added that the restructuring of the Department of Mineral Resources and Energy into two separate entities would allow for a more focused approach to the entire petroleum value chain.