Petrol price decrease welcomed but government must do more to reduce fuel costs
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The fuel price drop, which comes into effect tomorrow, is cold comfort for South African motorists. So says Neil Roets, CEO of Debt Rescue.
While decreases across the board of 68 cents per litre for petrol 95, 71 cents per litre for petrol 93, 67 cents for diesel 0.05%, 69 cents for diesel 0.005% and 71 cents for illuminating paraffin are indeed welcome, the fact is that South Africans continue to pay extraordinarily high prices for fuel.
“We saw massive cost increases come into effect in November and December with the latter seeing motorists fork out an extra 75 cents for petrol 93 and 95, 73 cents more for 0,05% diesel and 75 cents for 0,005% diesel. Illuminating paraffin cost 42 cents more per litre. This latest adjustment thus effectively take us back to where we were in November price-wise, which at the time was seen as catastrophic for motorists. As much as we are grateful for the halt in the upward trajectory of prices, we are definitely not out of the woods.”
The rising fuel price came under fire last quarter, prompting the Minister of Finance, Enoch Godongwana, to call on government to review how the cost of fuel is calculated. This followed the AA’s (Automobile Association) calls for the price of fuel to be reviewed as a matter of urgency, with a call to consider separating the fuel levy from the basic fuel price. In December, the Minister is quoted as saying, “A big part of the price increase is the levy. The way of countering price increases is an urgent matter, and that is on the table.”
“As we head towards the National Budget Speech in February, all eyes will be on government to better understand how they will review how the petrol price is calculated, as consumers are currently being fleeced at the pumps. This is a situation that is unsustainable and which has a major impact on consumers and household spending patterns and debt levels across the board,” says Roets.
Roets’s comments have been echoed by the AA, which, while it has been reported as saying it is pleased that the Minister of Finance is making some strides towards reforming the fuel price calculations, more needs to be done.
“South Africans are significantly over-indebted, so these slight decreases will be marginally felt. In fact, in December 2021, according to the Sarb (SA Reconciliation Barometer), nearly half of all South Africans were unable to pay their debts or had lost income during the past six months. This is largely due to the ongoing effects of the Covid-19 pandemic.
“Further, with close to three-quarters of South Africans not having enough money to make it through January, even with these decreases, many will continue to feel the pinch as they grapple with their financial obligations into the New Year,” says Roets.
He warns that more and more consumers will be forced to turn to credit to pay for everyday costs, an unavoidable if unsustainable option. According to a recent PayCurve survey, almost 80% of South Africans take out expensive unsecured loans to cover their monthly financial obligations.
“This is a vicious cycle and one that can end in an expensive legal battle with creditors. For those who find themselves in this circumstance, there is relief in the form of debt counselling: all existing credit is paid off monthly, while any further legal action is prevented.”