Govt’s petrol price ‘gift’ will come back to bite us – experts

Johannesburg – Monday’s intervention by the Energy Department to 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, will come back to haunt motorists over the next few months, says economist Dawie Roodt.

“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 Central energy fund had in predicted a price rise of 28 cents a litre for petrol and 31 cents a litre for diesel.

“But by ignoring this formula to limit the price increase in September,“ he warned, “there is a very real risk that the increases in months to come will be higher than would otherwise have been the case.”

Where did the money come from?

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 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.

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