Picture: THE TIMES
Picture: THE TIMES

The  energy department  has proposed changes to the structure of the nation’s basic fuel price as it seeks to reduce the cost of  petrol and diesel.

The proposals include making Singapore the main reference market for the basis price of petrol, diesel and paraffin,  removing a premium on the freight rate and reducing the coastal storage element in the calculation.

The basis fuel price accounts for just under half of the retail price of petrol, which is regulated by the government and is determined by the movement of international prices and the rand’s exchange rate.

The proposals published for comment in the Government Gazette make no mention of changes to taxes and levies, which make up almost a third of the retail price of petrol.

The  retail price has increased 22% over the past year to a record high in October, adding to pressure on consumer spending and fuelling inflation.

While energy minister Jeff Radebe is reported to have said the government will finalise proposals to cap the price of 93-octane petrol by the end of January, finance minister Tito Mboweni said in October’s  medium-term budget policy statement that the fuel levy will need large increases to manage the liability of the loss-making Road Accident Fund.

For September, Radebe announced a temporary intervention to limit the monthly price increase, but in October the cost shot up by R1 to more than R17/l  in Gauteng.  — Bloomberg