PRETORIA – In a forerunner to other possible measures to boost consumer and business confidence ahead of next year's general election, Minister of Energy Jeff Radebe has surprisingly announced that fuel prices would remain unchanged this month, apart from a 4.9c a litre increase in the retail margin.
The increase in the retail margin of petrol was in line with the Motor Industry Bargaining Council agreement of November 18, 2016, and to cater for the annual salary increase for forecourt attendants, cashiers and other admin staff.
An increase in the petrol price of close to 30c a litre was expected this month, because of the depreciation in the value of the rand and under-recovery on the current fuel price and strengthening of global oil prices.
There have been a series of protests in recent months about increases in the petrol prices, with People Against Petrol and Paraffin Price Increases calling on the government to halt all future fuel price increases and a boycott on voting in next year's general election if petrol prices continue to increase.
Radebe said yesterday that the department had decided to intervene temporarily this month, but stressed that this was a “once off temporary intervention to provide some relief to motorists and consumers against fuel price hikes”.
Azar Jammine, the chief economist at Econometrix, said he was fascinated to note that the petrol price was not going to increase this month, apart from the slight increase for the salaries of forecourt staff.
“This suggests they (the government) are going to absorb this. But where are they going to get the money to pay for this?” he asked. Jammine added that based on the under recovery in the current petrol price, Econometrix was expecting a fuel price increase of between 25c and 30c a litre.
“Given the weakness in the rand in the last couple of days and the rise in the oil price to above $78 a barrel, you would have thought that they would have needed to increase it.
“The losses are going to build up even more as a result of this. It’s crazy, because at some point in time there will be catch up and all hell will break loose,” he said.
- BUSINESS REPORT