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How SA’s petrol price is set and why fuel should be deregulated

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How SA’s petrol price is set and why fuel should be deregulated

Regulation dates back to WW2, but efforts at reform have been stalled by vested interests and lack of political will

Rod Crompton

SA’s latest fuel price increase, which came into effect on December 1, took the cost of petrol to more than R20 a litre mark in parts of the country for the first time. The increase sparked public outcry. The Conversation Africa’s Nontobeko Mtshali asked energy sector expert Rod Crompton to share his insights into what influences the price, which is adjusted monthly, and explain how it’s calculated.

What are the three broad components of the pump price of fuel in SA?

The first is the price of importing petrol, an import parity price called the Basic Fuel Price. The second component consists of regulated margins. These are the regulated costs and profits for wholesale, retail and pipeline transport services. The third component is made up of taxes and levies, such as the Road Accident Fund (RAF) levy, which pays for insurance for traffic accident victims. Added together, they result in the regulated petrol price seen at service stations...

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