Fuel to breach R10/l

2011-09-29 00:00

THE petrol price in KwaZulu-Natal will almost certainly breach the R10 per litre mark next Wednesday — primarily as a result of the recent weakness of the rand versus the U.S. dollar.

A senior economist at Econometrix, Tony Twine, told The Witness yesterday that the petrol price could rise by as much as 49 cents a litre in October. The wholesale price of diesel could be go up 53 cents a litre.

The under-recoveries on both petrol and diesel prices are substantial, amounting to 34 and 38 cents a litre respectively, Twine said. Furthermore, there is a good chance that the National Energy Regulator of SA (Nersa) will grant fuel retailers an annual gross margin increase of between 10 and 15 cents a litre, bringing the cumulative price increase for petrol up to as much as 49 cents a litre.

An under-recovery on a fuel product essentially means that fuel consumers are paying too little for the product on that day.

There has been significant turmoil and volatility on financial markets on the back of the ongoing eurozone debt crisis and fears of a secondary recession. This has hit the rand, which depreciated to levels of R8,30 to the dollar from R7,10 in recent weeks. Global oil prices have remained relatively steady over the past few weeks.

“It’s very typical for diesel prices to show a bigger price increase at this time of year as inventories are built up in preparation for the northern hemisphere winter,” said Twine.

The final announcement of fuel price adjustments is expected to be made tomorrow

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