Massive Fuel Hike in SA: The ‘extra’ levy that South African motorists are paying at the petrol pumps
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Staff Writer19 October 2021
South Africa’s ‘slate levy’ is effectively a self-adjusting mechanism that government uses to deal with daily differences in petrol prices, says the chief executive of the Fuel Retailers Association Reggie Sibiya.
The slate levy has come under scrutiny in recent months as motorists grapple with record-high petrol prices. Mid-month data from the Central Energy Fund (CEF) shows that another steep increase is due in November, which could lead to a further rise in the slate levy.
Under South Africa’s current energy system, the Basic Fuel Price (BFP) only changes once a month when the Minister of Energy announces the new petrol price, Sibiya told the SABC.
He noted that the ‘official’ BFP is currently sitting at around R8.27, which will remain in place until the price change at the end of the month. But the ‘real’ BFP changes every day, and tomorrow it could be R10, he said.
That means that somebody buying a barrel of fuel will be paying R2 more, Sibiya said. It can also work the other way where a buyer pays R2 less than the BFP.
Sibiya said that these daily changes are calculated at the end of the month by the Department of Energy, based on either the under-recovery or over-recovery, with additional cost or savings then passed onto motorists.
Based on mid-month estimates, there is currently uncertainty regarding changes to the Slate Levy, the Automobile Association of South Africa has warned.
“Brent Crude has broken through the 85 US dollars per barrel mark, and the basket of oil prices used to calculate South Africa’s oil price are following Brent higher,” it said.
The AA noted that over the first half of October, the average Rand/US dollar exchange rate jumped from around R14.55 to the dollar to R14.90.
It says the rand is still far above its June level of below R13.50 to the dollar, but the strengthening trend lasting nearly 15 months was abruptly reversed in June.
“The under-recovery to date this month has been vast, and the government will, in our view, have no option but to increase the Slate Levy to recover this deficit, making for a bigger hike,” it said.
“South Africans are paying at the pumps for weak governance, as one of the key indicators of the price of fuel depends on the exchange rate.”
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