Department of Energy (DoE) chief director for hydrocarbons Muzi Mkhize said on Tuesday that the department was reviewing how South Africa calculated its basic fuel price.
The review has started and would be completed before the end of the current financial year, Mkhize said at a media briefing in Pretoria, hours before a big fuel increase comes into effect.
Calculations to determine the basic fuel price currently take into consideration benchmark prices from fuel refineries in Singapore and the Mediterranean regions deemed “most efficient”, in an effort to prevent consumers paying for higher prices that inefficient refineries may impose on them.
Mkhize added that South Africa’s coal-to-liquid (CTL) technology did not necessarily guarantee that the country had a buffer to external forces that determine the price of brent crude oil.
“The CTL technology at times have a positive impact on South Africa’s fuel price, while at other times it has the opposite effect,” he said.
Meanwhile, Energy Minister Dipuo Peters called upon South Africans to use fuel sparingly, saying that the DoE was aware of the public concern over the fuel price increase that takes effect on Wednesday.
“Indeed, the fuel price increase will impact negatively on all South Africans who have no choice but to engage in their normal economic and household activities, which require the use of fuel,” she said.
Further, with regard to potential Western sanctions against oil imports from South Africa’s most significant supplier, Iran, Peters said government had put together a task team to investigate the impact this could have on the country’s basic fuel price, as well as all alternative available options.
She conceded that it would be least desirable to import oil from other sources, owing to the exhaustion of all other available options, resulting in significantly increasing the already high fuel price.
“The DoE task team is engaging with all role players to determine the exact nature of sanctions against Iran and the impact it will have on South Africa’s basic fuel price. Rising geopolitical tensions in other oil-producing regions will also be investigated.
“The task team would report to Cabinet during May on the outcomes of the investigation, whereafter the appropriate course of action will be decided on,” Peters said.
Some of South Africa’s refineries, designed to use brent crude imported from Iran, would have to be upgraded at significant cost to be able to process oil from alternative sources.
From midnight, motorists would have to fork out 71c/l more for 95-octane petrol in the inland region and 66c/l more at the coast.
The inland price of 93-octane petrol would increase by 73c/l.
The price of 0.005% sulphur diesel will increase by 47.6c/l at the coast, while the price for the same product inland would increase by 51.9c/l.