Petrol Price in SA: What are you really paying for?

Have you ever wondered what you are paying for when you fill up your car with petrol? This article provides some insight…

As consumers of petrol, motorists are often not aware of what they are paying for (apart from fuel) when they fill up their vehicles. There are numerous costs that constitute the petrol price and as a consumer, you should be aware of what you are actually paying for when you pull into your nearest petrol station.

In South Africa, the price of petrol is adjusted monthly, based on a number of factors, the most important being international petroleum prices and the Rand/US dollar exchange rate.

Take a look at the infographic below for a visual representation of the breakdown of the petrol price in South Africa.

Infographic supplied by the AA

The costs of petrol

As a starting point, the Basic Fuel Price (BSF) is worked out according to costs associated with shipping petroleum products to South Africa from areas around the world such as the Mediterranean, Arab Gulf and Singapore. These costs include insurance, storage and wharfage, which includes using harbour facilities and transferring petroleum products into storage.

In the month of March 2016, these costs represent a total of R4.70 per litre (inland) of 93 unleaded petrol.

From that point onwards, other costs come into play, such as transporting petroleum to other areas, customs and excise duties, retail margins and secondary storage costs. In addition to these costs, the petrol price also includes the Fuel Levy as well as the Road Accident Fund (RAF) levy.

In March 2016, these costs accounted for R6.76 (inland) per litre of 93 unleaded petrol. Of this amount, R2.55 was allocated to the Fuel Levy while R1.54 was allocated to the RAF Levy.

Note: The Fuel Levy goes directly to the National Treasury while the RAF Levy goes to the RAF to assist accident victims.

That means, with petrol costing about R11.46 per litre, R4.09 or approximately 35% is allocated to different government levies.

Finance Minister, Pravin Gordhan’s Budget Speech in February 2016 highlighted that the Fuel Levy and would increase by 30 cents to R2.85 in April 2016.

Using basic arithmetic, it’s clear that if you fill a car with a 50-litre fuel tank, it will cost you about R573. Of this amount, you are paying a total of R204.50 to government levies. The Fuel Levy accounts for R127.50 while the RAF contribution accounts for R77.

If the petrol price remains unchanged by the end of April, the Fuel Levy contribution will increase to R142.50 while the RAF levy will remain unchanged at R77 reaching a combined total of R219.50.