South Africa’s daily unleaded petrol price over-recovery surged to 75,605 cents per litre (c/l) on August 29 from 54,917 c/l on August 28 and 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 price.
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.
At this stage it looks as if the Department of Minerals and Energy (DME) could implement a retail petrol price cut of about 33c/l on September 6 2006 provided the daily over-recovery remains at or above the August 29 level.
This would then be followed by a further cut of about 40c/l on October 4. 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 7,1631 per US dollar on August 29 and only 6,8169 per US dollar on August 9.
The Opec Reference Basket (ORB) 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 $65,51 on August 29.
The new 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 (UAE) and BCF 17 (Venezuela).
South Africa’s international petroleum product prices are closely correlated with the ORB, rather than Brent or Nymex crude oil futures prices, which tend to be higher than ORB. – I-Net Bridge