Petrol costs R12.63 to import, so why do we pay over R23? AA sheds some light

South Africans pay R23.01 for a litre of 93 Unleaded, but the landed cost of petol is only R12.63. Picture: Newspress

South Africans pay R23.01 for a litre of 93 Unleaded, but the landed cost of petol is only R12.63. Picture: Newspress

Published May 23, 2023


Johannesburg - Petrol and diesel prices have become a bone of contention for South Africans, and justifiably so.

Thanks to an ever-weakening rand and erratic international oil prices, the cost of fuel has increased significantly in recent years.

Consider that just two years ago, a litre of 93 Unleaded in the inland regions cost R17.01 and five years back, it was listed at R14.21. Today, we’re forking out R23.01.

Apart from the basic cost of importing fuel, there are many factors that influence fuel prices in South Africa. A hefty tax structure as well as transport and retail costs weigh significantly on the price we pay at the pumps.

According to the Automobile Association (AA), the Basic Fuel Price (BFP) for 93 Unleaded petrol, this being the cost of importing fuel into the country, is R12.63 per litre. This includes the fuel itself as well as all the associated shipping and insurance costs.

How do we end up paying just over R23 at the pumps?

A significant portion of this comes down to taxation, with the General Fuel Levy (GFL) adding R3.96 to the petrol tally (R3.82 for diesel) and the Road Accident Fund Levy contributes R2.18. The two levies add up to R6.14 on a litre of petrol, or 27% of the total price.

While one could easily assume that the General Fuel Levy covers things like road maintenance (or perhaps not, given the state of our roads), the approximately R90 billion that it generates each year goes directly to Treasury for any use the government deems fit, the AA says.

Of course, retail margins also need to be factored in, and these add R2.42 to the cost of every litre of petrol, while diesel margins vary as that fuel type is unregulated.

Local transport and storage costs as well as custom and excise duties add a further R1.82 to the price of petrol inland and around R1.10 at the coast.

And that, folks, is how South Africa’s petrol and diesel prices are calculated.

With fuel costing less in many neighbouring countries, our fuel taxes are certainly a hard pill for South Africans to swallow, although, thankfully, the finance minister avoided increasing the levies in 2023 and 2022.

The AA believes that several steps can be taken to soften the fuel-price blow for South Africans.

Back in 2021, the association made a representation to the parliamentary portfolio committee on mineral resources and energy, in which it recommended a recalculation and audit of the fuel pricing model. It also suggested that better law enforcement on the road could lead to fewer accidents, thus reducing the burden on the Road Accident Fund.

But where are South African fuel prices heading from here?

Thanks to lower international oil prices this month, fuel prices are looking set to come down next month, even if the rand is putting a damper on things.

Read our June 2023 petrol and diesel price predictions

IOL Motoring