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Bumpy ride for South African motorists

PETROL PRICE HIKE
Motorists could pay about R20/ℓ for petrol this year

PETROL PRICE HIKE Motorists could pay about R20/ℓ for petrol this year

Photo by Duane Daws

19th February 2016

By: Simon Sonnekus

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The expected rise in Brent crude oil prices and geopolitical decisions by South Africa will influence the petrol price and vehicle prices in 2016, says the Automobile Association (AA) of South Africa.

According to audit, advisory and tax services firm KPMG automotive sector partner Gavin Maile, a rise in the fuel price will cause local automotive vehicle producers to hike prices, as transporting the components will become more expensive.

However, he states that even if the fuel price increases, manufacturers will benefit from the weak exchange rate when they export locally manufactured models.

“We release a speculative monthly fuel price twice a month, where we measure the hypothetical fuel price by taking the current price of Brent crude oil and the exchange rate into account. We also receive the under and over recovery information from the Central Energy Fund (CEF) and, with these three components, we are able to predict what will happen to the fuel price in the following month,” AA spokesperson Layton Beard tells Engineering News.

This is despite a relatively stable fuel price over the festive period, owing to lower prices of Brent crude oil, which, in December, was reported to have dropped to $30/bl.

He points out that unaudited data from the CEF released in mid-January show that, had the exchange rate remained flat in 2015, motorists could have enjoyed a saving in the region of 45c/ℓ at the pumps in 2016. However, should oil prices return to highs such as those witnessed in 2013 and 2014, motorists could pay about R20/ℓ for petrol this year.

“Geopolitical activity can also dictate how the fuel price fluctuates, as we saw in December, when replacing Minister Nhlanhla Nene as the Minister of Finance had an immediate effect on the exchange rate,” says Beard.

Also, adding to motorists’ pain, he indicates that, should the proposed amendment to the Administrative Adjudication of Road Traffic Offences Act be implemented, authorities can go as far as to deny e-toll defaulters their vehicle licence.

“This makes the situation all the more cumbersome, as only 10% of users are paying their e-toll accounts. This would lead to thousands of people not renewing their licences,” Beard concludes.

Edited by Zandile Mavuso
Creamer Media Senior Deputy Editor: Features

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