The petrol price – all you need to know

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Have you ever considered why petrol costs what it costs? Do you know what the price is comprised of, and why?

To help you understand a bit more of the fuel price, the AA have put together a short summary of what comprises the petrol price, both inland, and at the coast.

The figures represented below are based on the April 2017 petrol price. As of 5 April, South African motorists received a 24 cents a litre decrease in the price of petrol. But this decrease could have been much more significant had fuel taxes not increased at the same time.

In his budget speech in February, former Finance Minister Pravin Gordhan announced that the General Fuel Levy would increase by 30 cents, and the Road Accident Fund (RAF) levy by nine cents.

But what does this mean, and how does it impact on you?

The General Fuel Levy is a tax charged for every litre of petrol sold. In April last year, this tax increased by 30 cents from R2.55 to R2,85. For the second year in a row, this tax is increased, again by another 30 cents, and now stands at R3.15. This money is administered by the National Treasury, and is treated as a general tax and not, as many people assume, for road-related expenses.

Money collected through the RAF levy portion of every litre of petrol sold is used to fund the Road Accident Fund, which uses the money to compensate victims of road accidents in South Africa. This levy also increased on 5 April to to R1.63.

So, if a litre of petrol (inland) costs R13.08, then R4.78, or 35 percent, of the total cost of that litre goes towards direct or indirect taxes.

In South Africa, the price of fuel is adjusted monthly based on a number of factors, mainly international petroleum prices, and the Rand / US Dollar exchange rate.

The Basic Fuel Price (BFP) is calculated based on costs associated with shipping petroleum products to South Africa from the Mediterrean area, Arab Gulf, and Singapore. These costs include insurance, storage, and wharfage, the cost to harbour facilities when off-loading petroleum products into storage facilities.

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