Petrol users across South Africa are paying around R1.50 a litre more for fuel in May 2023 than at the same time last year, despite decreases in the global oil price due to how petrol prices are determined in the country.
This is according to the Automobile Association of South Africa (AA), which outlined how the fuel price is calculated in South Africa.
Taxes and levies comprise 28% of fuel prices in South Africa, with only 53% to 55% being determined by fuel importing costs.
Thus, fuel prices in South Africa are much higher than expected and even higher than what citizens in neighbouring countries pay for imported fuel from South Africa.
There are four main components:
- General Fuel Levy
- Road Accident Fund (RAF) Levy
- Basic fuel price
- Wholesale and retail margins
The basic fuel price is the largest component at 53% to 55%, which, according to the AA, equates to roughly R12.63 per litre.
The figures are based on 93 Octane fuel (inland) and 95 Octane (coastal).
This is the price determined by the cost of importing oil from international producers, including additional costs such as insurance, storage, and transport. The oil price and the USD/ZAR exchange rate heavily influence the basic fuel price.
Wholesale and retail margins make up roughly 15% of the fuel price, costing R2.42 per litre. This is influenced by the costs of transporting fuel within South Africa, storing it, and pumping it.
The two levies on fuel make up a significant 28% of the fuel price, meaning that government-imposed levies cost South Africans R6.14 per litre of petrol.
17% is due to the General Fuel Levy, which equates to R3.96 per litre. This levy goes directly to the National Treasury and can be used for any purpose the government considers fit.
In 2023, the AA estimates the General Fuel Levy to generate R90 billion in revenue for the government.
The RAF levy, on the other hand, costs motorists R2.18 per litre of petrol and is used to fund the RAF. This funding is expected to total R48 billion in 2023.
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.
The infographic below shows how these components affect the inland petrol price in South Africa.
How to make fuel cheaper
The AA told the Parliamentary Portfolio Committee on Mineral Resources and Energy in mid-2021 how the government could reduce fuel prices for South Africans.
It recommended that the government recalculate and audit the existing four elements of the fuel price and a reduction in the costs of the RAF for motorists.
This could be done 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 also said that reducing corruption at the RAF would significantly reduce the costs of funding it on the government and motorists.