The Department of Minerals and Energy could implement a retail petrol-price cut of 32c per litre (c/l) on September 6 2006, provided the daily over-recovery remains at or above the August 14 level.
South Africa’s daily unleaded petrol-price over-recovery soared to 51,158 c/l on August 14 from only 21,136 c/l on August 9.
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.
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 current averaging period runs from July 28 to August 31 and a price announcement is due on September 1.
The rise in the over-recovery is entirely due to a drop in international product prices, as the rand exchange rate used to calculate the basic fuel price was 6,8169 per United States dollar on August 9 and 6,84 on August 14.
The Organisation of Petroleum Exporting Countries (Opec) reference basket of 11 crude oils saw its price drop from a record $72,67 per barrel on August 8 to $72,54 on August 9 and only $69,54 on August 14.
The new Opec reference basket (ORB) is made up of the following: Saharan Blend (Algeria), Minas (Indonesia), Iran Heavy (Islamic Republic of Iran), Basra Light (Iraq), Kuwait Export (Kuwait), Es Sider (Libya), Bonny Light (Nigeria), Qatar Marine (Qatar), Arab Light (Saudi Arabia), Murban (United Arab Emirates) and BCF 17 (Venezuela).
South Africa’s international petroleum-product prices are closely correlated with the ORB, rather than the Brent or Nymex crude oil futures prices, which tend to be higher than ORB. — I-Net Bridge