South African petroleum product price rises will be capped at 30 cents a litre and this policy will be maintained for as long as possible, Minister of Minerals and Energy Phumzile Mlambo-Ngcuka announced on Tuesday afternoon.
The Department of Minerals and Energy on May 20 announced that the government was concerned about the current and projected future increases and had requested the department to, within the limited resources, investigate options to cushion these anticipated fuel-price increases.
“Should the options that are currently being investigated prove viable, consumer prices increases should be kept as low as possible for as long as possible,” the department said at the time.
An announcement had been expected on Tuesday morning, but this was delayed without explanation as the minister had to sign off on the announcement.
This delay resulted in the capital market weakening even though the rand had gained more than 10 cents against the United States dollar during the course of the day to its best level since April 13.
“Government is especially mindful of the high cost of paraffin to many of our people at the onset of winter and also the impact that high fuel prices will ultimately have on the rate of inflation,” the department’s media statement said.
“Government is aware of the impact of these high prices on our people, both rich and poor, and on the economy at large. Unfortunately for South Africa, as with all other non-producing countries, the pricing of petroleum products, although regulated in South Africa, is not under government control,” it added.
Prior to 1991, the government changed the retail price of petroleum product prices only infrequently and some people are hoping that the announcement will herald a return to this policy.
The department’s media statement shed no light on how long the new policy will remain in place.
If the department had to apply the normal rules for the calculation of fuel price increases, the price increase to be implemented on June 2 this year would have been 38 cents a litre for petrol and 42 cents a litre for illuminating paraffin.
“The minister of finance and I have, however, agreed that fuel price increases be capped at 30 cents a litre and be subsidised from the Equalisation Fund and therefore all product price increases will be curbed at 30 cents a litre. It is trusted that the capping of the paraffin price at the wholesale level will also find its way through to the retail price of paraffin,” Mlambo-Ngcuka said.
The May 31 over-recovery in unleaded petrol was only 23,273 cents a litre, while for diesel 0,3% sulphur it was 16,803 cents a litre, for diesel 0,05% sulphur it was 13.12 cents a litre and for illuminating paraffin it was 16.675 cents a litre. — I-Net Bridge