By: Natasha Archary

How is the petrol price determined in South Africa?
Reggie Sibiya, the chief executive at Fuel Retailers’ Association joins Gugulethu Mfuphi on Kaya Biz to explain what factors drive the price of petrol up or down.
On Wednesday, 03 April motorists were hit with yet another increase in the cost per litre of petrol, while diesel users were spared somewhat.
The cost of 93 unleaded petrol (ULP) went up by 65c/l in Gauteng, while 95 ULP increased by 65c/l.
This means that motorists in the province will be forking out R24.78c/l and R25.12c/l respectively for 93 ULP and 95 ULP.
According to Sibiya, the cost of petrol is regulated by a number of factors.
“It is a regulated price which is guided by what we call, margins made up of different factors in the value chain.
That is from production up to selling point and that is where I say the rubber hits the road because there are two major conflicts at that point which is, 1. the grudge purchase and 2. the grudge sale.
So, of the R25.12c/l there is R2.85 that is for retail activity. Now let me first break down the R2.85, if you buy a franchise that person will collect an OPEX fee, which is what we call an Operational Expense, in this case it’s R1.54.
Then what is allocated for running that franchise for a profit is 39.2c
I want this number to sink in for those who may be considering buying a service station.
The rest of the money is collected by the oil companies 68% and government as taxes and levies.”
The R1.50 fuel levy which was cut in April and May 2022 was a temporary respite from the levy.
Fuel levies are used to reimburse the pipeline users for the applicable NERSA tariff of transporting fuel through said pipeline.
The levy is set by the Ministers of Energy and Finance in line with the expenditure budget of NERSA.
Levies are also meant to finance the cumulative under recovery of the industry.
Listen to the conversation on Kaya Biz:
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