The Central Energy Fund (CEF) said on Tuesday that a weaker rand and a higher international oil price led to more than a R1 under recovery for all grades of fuel in the first 10 days of September, putting motorists in line for yet another hefty fuel price increase.
Unleaded 95 petrol saw a R1.11 under recovery during the period, 65c of this due to a weaker rand, and 45c due to a rising oil price. Diesel saw the most under recovery, at R1.37, followed by illuminating paraffin’s R1.36.
A rising fuel price has become a key political issue recently after a number of hefty increases, with energy minister Jeff Radebe intervening in August to cap September’s increase at 5c, as opposed to an increase of between 25c and 28c.
The move is expected to cost the government about R500m, and has led to concerns of populist pandering, despite assurances from Radebe it would not be repeated.
The rand has slipped about 2.63% against the dollar so far in September, under significant strain from emerging-market contagion and news that SA entered a technical recession in the second quarter.
At 9.50am on Tuesday, the local currency was almost 1% firmer against the dollar at R15.04, with analysts saying the local currency was poised for further gains in the short term.
At the same time Brent oil was 0.61% firmer at R77.81 a barrel. The price of Brent crude has risen 0.2% so far in September, recently bolstered by concerns of tightening supply amid stricter sanctions against Iran.