The fundamental drivers behind the fuel (petrol and diesel) price: August 2020

In today’s challenging business environment, the cost of diesel has a considerable impact upon the operational efficiency of commercial businesses. Consequently, it is important to the ability of these businesses to stay competitive, that they are aware of how pricing for this big spend item is determined and where they can find this information, allowing them to monitor and then react quicker to any notable pricing changes.

Final fuel price change announcements by the Central Energy Fund (CEF) are typically done on the Monday before the price change, but here is how you can get a good indication of what is going to happen by doing your own research during the month.

Whilst diesel is a deregulated fuel product, there are still price shifts that come into play when the fuel price changes on the first Wednesday of every month. This is as a result of changes in the monthly calculation of Basic Fuel price BPF pricing. The calculation of the new price is done by the CEF on behalf of the Department of Energy (DoE).

The updated fuel prices can be accessed once a month from the CEF webpage. More information about fuel price calculations can also be accessed via the South African Petroleum Industry Association (SAPIA) webpage, and the DoE’s webpage

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Demystifying fuel prices

The wholesale list price of fuel consists of various price elements that can be divided into international and local contributing factors. 

The international element of the price or Basic Fuel price (BFP) is based upon how much it would cost a South African importer to purchase petrol from an international refinery and then, transport the product to local shores. 

To arrive at the final selling price within the different fuel pricing zones (magisterial district zones), local contributing factors like domestic costs, taxes, duties, levies and margins are added to the BFP. 

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Pricing for fuel is generally higher inland as compared to the coastal areas, due to the cents per litre costs of transporting fuels from the coastal port or refinery locations to the inland distribution centres. This can be done through a variety of transportation channels including a pipeline, the railway system or by way of the road on trucks. These costs differ by zones, calculated by SAPIA on behalf of the oil industry, and is subject to ministerial approval for inclusion within the oil company wholesale price structures.

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BFP vs basic price and the role of the Slate Account 

Whereas, the BFP is based upon the cost of importing product, the basic price is the cost charged to consumers that is fixed for a month. When BFP is more than basic price, then an under recovery is realised on that day, which means that the price of fuel end-customers are paying for at the pump in actual fact is too little for the product. An over recovery situation arises when consumers are paying a little more than the BFP. These calculations are based on the average BFP for the month. 

This monthly unit over/under recovery is then multiplied by the volumes sold locally during that month and the cumulative over/under recovery is recorded on a Cumulative over/under recovery account that is referred to as the ‘Slate Account’. In order to finance the balance in the Slate account when the Slate is in a negative balance, a Slate levy is applied on fuels. 

Businesses that want to keep track of the movement of the under and over recoveries at any point in the month, or simply wish to understand what the predicted price change is going to be on the first Wednesday of the month, can visit CEF daily fuel price. On this page, they can refer to the line entitled Average unit over/(under) recovery by product.

The closer to the first Wednesday of the new month it is that you are viewing this website, the more indicative of the reality of the price change it will reflect. Note that the slate changes indicators and not the actual published fuel price change is issued on the Monday before the price change.

Typically, in December and April fuel prices change with regards to updates in the retailer margins and the fuel tax.

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