The steep increase is despite the treasury’s decision extend the reduction in the general fuel levy by 75 cents a litre
The price of 95-octane unleaded petrol is set to rise by R2.57 a litre on Wednesday, while 93-octane unleaded petrol will go up by R2.37 a litre, the mineral resources and energy department announced on Monday.
The July price increase will push the price of 95-octane petrol to a record high of R27.74 a litre, from R24.17 a litre last month, and that of 93-grade to R26.31 a litre from R23.94.
The wholesale price of diesel will rise by R2.31 a litre for the 0.05% sulphur grade and by R2.30 for 0.005% sulphur, while illuminating paraffin will cost R1.66 more in wholesale trade. Millions of poor South African households still rely on paraffin for cooking and lighting.
The department said fuel prices for July had been pushed up by higher oil prices, with the average price for Brent crude oil rising from $115 a barrel to $115.77 over the past month. This was largely because of increasing demand as China lifted its Covid-19 restrictions. In addition, the European Union had reached an agreement to partially ban importing crude oil and petroleum products from Russia by the end of the year.
Wednesday’s increase factors in the decision by the treasury to extend the reduction in the general fuel levy by 75 cents a litre. The petrol levy was cut by R1.50 a litre for April and May and the reprieve was extended to June.
For July, however, the government has committed to cutting the levy by only 75 cents and the respite is set to be withdrawn from 3 August.
The extension of the general fuel levy reduction has cost the treasury an estimated R4.5-billion in revenue.
The department had previously said it would, from 1 June, remove the demand side management levy of 10 cents a litre for 95-octane unleaded petrol in inland areas to further shield consumers from the fuel price shock.
Anathi Madubela is an Adamela Trust business reporter at the M&G.