South Africa is in line for significant price cuts in all major fuel types from Wednesday, according to the Central Energy Fund’s (CEF) September fuel price adjustment.
Motorists will pay R2.04 less per litre of both grades (93 and 95 octane) of petrol, while at wholesale level a litre of 0.05% and 0.005% sulphur diesel will be 56 cents and 46 cents cheaper, respectively. Illuminating paraffin will decrease by 82 cents a litre.
The latest fuel price cuts will come as much-needed relief for many motorists as well as consumers, who in the last few months have been buckling under pressure amid spiralling fuel prices and a rising cost of living.
According to the CEF, the fuel price drop is justified by a drop in international fuel prices as well as a stronger rand compared to the US dollar between the end of July and the start of September.
“The average rand/US dollar exchange rate for the period 29 July to 01 September 2022 was 16.7016 compared to 16.8719 during the previous period. This led to a lower contribution to the basic fuel prices on petrol, diesel and illuminating paraffin by 12.97 c/l, 15.63 c/l and 15.90 c/l respectively,” CEF said in a statement.
The CEF touted a bigger decrease of as much as R2.60/l for 95 octane petrol in mid-August, and over R2/l decreases in both 0.05% and 0.005% diesel, but the rand gave up some of its gains against the US dollar since then.
This, together with the ongoing spike in diesel demand due to shortages globally, saw the decrease especially for diesel being lower than expected for September.
With the rand losing more ground over the past few days – trading around R17.19 to the US dollar on Monday compared to an average of R16.70 to the greenback between 29 July to 01 September – fuel prices may return to increases next month.
That’s if the rand stays at current levels or weakens further, and if crude oil prices surge again.
This article first appeared in www.moneyweb.co.za
