The Department of Minerals and Energy is likely to announce a cut of 22 cents per litre (c/l) cut in the retail petrol price for the month of December, if the rand exchange rate and international petroleum prices remain at Friday’s levels.
The retail petrol price is adjusted monthly on the first Wednesday of the month in accordance with the previous averaging period’s over- or under-recovery.
The November averaging period was from September 30 to October 27, and resulted in a 31c/l cut due on November 2. The December averaging period is from October 28 to December 1.
The October 28 over-recovery on the daily basic petrol price was 55,44c/l, compared with 39,397c/l on October 14.
An over-recovery means that the basic petrol price — based on the daily product price and exchange rate — is less than the basic fuel price used in the calculation of the monthly retail petrol.
An over-recovery therefore implies that the retail petrol price can be lowered at the next monthly price adjustment, provided the government does not introduce a new levy or raise either the wholesale or retail margin.
For the November 2 retail petrol-price adjustment, the average over-recovery for the period was 32,698c/l.
This is then rounded to the nearest cent so that the effect of rounding contributes to the clearing of the cumulative balance of the individual products on the slate.
From March 3 1999 onwards, an additional mechanism was approved by the minister of minerals and energy, intended to assist in management of cumulative slate balances.
The cumulative petrol slate was a negative R983,667-million at the end of August, which means motorists pay an additional 1c/l to clear the slate. — I-Net Bridge