The R85m question: Why is South African fuel cheaper in neighbouring countries?

The R85m question: Why is South African fuel cheaper in neighbouring countries?

- South Africa serves as a fuel bank and exporter for the entire South African region

- Fuel prices are set to reach record high levels when the price increases at midnight tonight

- Only Zimbabweans pay more per litre of fuel than South Africans, despite much of the region importing fuel from South Africa

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South African motorists are bracing themselves for record high fuel prices. The price of petrol will rise by 82 cents per litre and diesel will rise by between 85 and 87 cents per litre at midnight on Wednesday.

These increases will drive fuel prices to their highest ever levels, users who live inland will pay between R15.54 and R15.79 depending on the grade of fuel. This increase means motorists will pay about R50 more to fill up a car with a 60-litre tank.

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Many South Africans are bemoaning the fact that our neighbouring countries pay less for fuel, despite importing most of their fuel from South Africa.

Briefly.co.za gathered that only Zimbabweans pay more for South African fuel than South Africans.

Citizen.co.za reports that petrol costs R11.69 in Namibia, R10.53 in Botswana, R11.67 in Lesotho and even the Swazi’s pay less than we do at just R12.78 per litre.

Briefly.co.za takes a look at the reasons why the fuel South Africa exports to our neighbours costs less in those countries than they do at the source.

• How did we get to the record high?

The whopping increase which kicks in at midnight on Wednesday is as a result of a weaker local currency, a rise in the global cost of crude oil and an under-recovery during the previous price increase which had to be recovered.

These factors explain the basic price of fuel, but not how or why we pay more for our own fuel than our neighbours. The simple explanation for the disparity is government-mandated taxes and levies on fuel.

• The fuel levy and tax rose after the last budget speech

Motorists might be shocked to learn that out of every R15.54 per litre we pay for petrol a whopping R3.37 goes to the general fuel levy. To add to this the government has no choice but to fund the Road Accident Fund (RAF) through additional taxes on fuel which comes to another R1.93 per litre.

This means government-mandated taxes and levies make-up R5.30 of every R15.54 which the consumer pays at the pump.

The AA’s Layton Beard said the government collects about R60 billion per year from the general fuel levy and another R25 billion for the RAF.

• Do South Africans get value for money?

Experts say despite the disparity with our neighbours, South Africans still receive relatively good value for money when it comes to fuel prices.

Compared to some European nations our fuel is still comparatively cheap, our system also allows for the price of fuel to rise and fall as the economy changes.

Lastly, many South Africans don’t realise that we are one of the last remaining countries in the world where someone else fills your tank, most other countries don’t have service station attendants.

Consumers have been warned to expect a rise in consumer products in the coming months as suppliers pass on the extra cost of transport to their clients.

Taxi fares are almost sure to rise as a result of the latest increase.

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Source: Briefly.co.za

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