South African truckers have welcomed the latest drop in the fuel price but say operators are still absorbing losses incurred during the significantly high price hikes that hammered the economy in recent years.
The Department of Mineral and Petroleum Resources announced fuel price drops of between 50c and 65c with effect from Wednesday, February 4. The price of paraffin has also dropped but the price of LP Gas has increased.
The following price adjustments will apply:
• Petrol 93 (ULP and LRP): 65c decrease.
• Petrol 95 (ULP and LRP): 65c decrease.
• Diesel (0.05% sulphur): 50c decrease.
• Diesel (0.005% sulphur): 57c decrease.
• Illuminating paraffin (wholesale): 53c decrease.
• Single Maximum National Retail Price for illuminating paraffin: 70c decrease.
• Maximum Retail Price of LP Gas: 31c increase (with a 36c increase in the Western Cape).
Road Freight Association acting CEO Kevin van der Merwe welcomed the price drop but said it would not necessarily lead to a drop in the price of consumer goods yet.
"Every drop in the price of fuel has a positive impact on reducing operating costs at a time when freight transporters have been under tremendous pressure from low operating margins.
“It will not necessarily translate to an immediate drop in the price of goods delivered by road due to the structure of many multi-year contracts, where operators operate in a fuel-cost band and have had to absorb losses when the price increases above the band on a prolonged basis.”
Van der Merwe said the drop in the fuel price was around 2.7%. However, South African diesel is still approximately 13% more expensive than the world average in dollar terms.
“This is positive news and cost reductions will filter through to consumers through the stabilisation in logistics input costs.”
According to the department, average international product prices decreased due to availability of inventories, despite an increase in crude oil prices.
“These factors led to lower contributions to the basic fuel prices of petrol, diesel and illuminating paraffin by 36c/l, 24.59 c/l and 21.13 c/l respectively,” the department said.
“The prices of Propane and Butane increased during the period under review due to the cold weather in the Northern hemisphere and tighter global supply,” it said.
The rand also strengthened against the US dollar, gaining ground from R16.85 to R16.31 per USD during the period under review.
“This led to lower contributions to the Basic Fuel Prices of petrol, diesel and illuminating paraffin by 28.52 c/l, 31.62 c/l and 31.86 c/l respectively,” said the department.
