South Africa’s fuel prices are adjusted on a monthly basis, informed by international and local factors. International factors include the fact that South Africa imports both crude oil and finished products at a price set at the international level, including importation costs. Photo: Dimpho Maja/African News Agency (ANA)
South Africa’s fuel prices are adjusted on a monthly basis, informed by international and local factors. International factors include the fact that South Africa imports both crude oil and finished products at a price set at the international level, including importation costs. Photo: Dimpho Maja/African News Agency (ANA)

Rising fuel prices have workers tapping water from a stone

By Sizwe Dlamini Time of article published Jun 30, 2020

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JOHANNESBURG – The increase in fuel prices to almost pre-lockdown levels on Wednesday is going to hit consumers like a ton of bricks.

Minister of Mineral Resources and Energy, Gwede Mantashe, announced the adjustment of fuel prices based on current local and international factors with effect from July 1.

South Africa’s fuel prices are adjusted on a monthly basis, informed by international and local factors. International factors include the fact that South Africa imports both crude oil and finished products at a price set at the international level, including importation costs.

Mantashe said in a statement that based on current local and international factors, the fuel prices for July 2020 would be adjusted as follows:

  • Petrol (both 93 ULP and LRP): R1.63/l increase
  • Petrol (both 95 ULP and LRP): R1.72/l increase;
  • Diesel (0.05% sulphur): R1.73/l increase;
  • Diesel (0.005% sulphur): R1.69/l increase;
  • Illuminating Paraffin (wholesale): R2.14/l increase;
  • SMNRP for IP: R2.85/l increase;
  • Maximum LPGas Retail Price: R4.48/kg increase.

Stanford Mazhindu, spokesperson of the trade union UASA said the gradually opening of global economies as countries eased out of lockdowns had increased demand resulting in a surge in the international prices of oil.

“UASA is concerned with how the increases will hit workers most of whom are still struggling to find their feet financially after losing incomes during lockdown levels 4 and 5. 

“With the cold winter months upon us, those most vulnerable in our society who use paraffin for cooking and heating purposes will now have to dig even deeper into their pockets to stay warm,” he said.

Neil Roets, chief executive of Debt Rescue, said the increases would have a devastating impact on consumers who were mostly three months or more behind in the repayments of their loans.

“Following the disastrous shut-down of the economy thanks to Covid-19 we need this like a hole in the head at the moment. While we fully understand that this is outside the control of the government, it is nonetheless going to slow down any hopes of a revival of South Africa’s economy battered by the shutdown,” he said.

Roets said there had been a dramatic increase in clients on the verge of bankruptcy seeking help from debt counsellors. “We have seen a major increase in the number of clients coming to us to have us place them under debt review.”

Roets said the combination of an expected multibillion-rand revenue collection shortfall and the Covid-19 economic meltdown spells trouble for the state’s ability to sustain society and should be seen as a ticking time bomb that could lead to widespread social unrest.

“The unemployment rate could go as high as a record 50 percent. This means a smaller tax pool and less revenue for the government to spend on development and social programmes such as education, health and social grants,” he said.

Roets said it was imperative to get the economy back to work – albeit in a safe and healthy environment. “We fully understand and agree that social distancing has to be maintained and even tightened to save lives but there is no sugar-coating the fact that consumers are heading for disaster.”

Roets said it was imperative for consumers to cut spending wherever possible and to repay high interest-bearing debts as quickly as possible. “With gross consumer debt at around R2.8-trillion (2018/19 Stats SA), it is clear that South Africans are in for a very rough ride.”

A recent World Bank index has also shown that South Africa is one of the most indebted countries in the world.

BUSINESS REPORT

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