Petrol price relief expected in December
'The BFP is a deemed import parity price used as a benchmark to determine domestic fuel prices'
IT could be a great end to the year for motorists owing to a massive fuel price decrease expected in December.
The Automobile Association (AA) has predicted that petrol will drop by R1.85 with diesel coming down by an estimated R1.40, and illuminating paraffin dropping by R1.28.
‘With these expected drops, the fuel prices will return to levels last seen around the middle of 2018,’ the AA said.
The Association was commenting on unaudited month-end fuel price data released by the Central Energy Fund.
‘These massive decreases stem from a combination of substantial retreats in international petroleum prices and a slightly firmer Rand, which has trended stronger against the US dollar since its most recent peak in early-September at close R15.50 to the greenback.’
This comes as government seeks public comment on the review of Basic Fuel Price (BFP) structures for petrol, diesel and illuminating paraffin.
The Department of Energy (DOE) recently published a discussion document on the review of the structures with consumers given until the end of January to make inputs.
‘The BFP is a deemed import parity price used as a benchmark to determine domestic fuel prices.
‘It does not take the true production and associated costs of refining locally but rather takes the view of what the alternative costs would be to import refined product into South Africa, thereby establishing a deemed import parity price.’
In South Africa, although the wholesale prices of petrol, diesel and illuminating paraffin are not regulated, the pump prices (retail prices) of all grades of petrol are regulated.
‘South Africa is a price taker because it imports crude oil and refined petroleum products and is a very small player in the global market,’ the document states.
Among the recommendations is the review of the freight rate.
‘The 15% premium should be removed and actual freight costs be obtained from the relevant international pricing agencies.
‘The freight rate includes all the costs associated with transporting products from international markets to their respective destinations.’
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