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Outrage and calls for fuel price audit as motorists overpaid for petrol on Wednesday

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Outrage and calls for fuel price audit as motorists overpaid for petrol on Wednesday

Petrol pump
Photo by Bloomberg

3rd December 2021

By: News24Wire

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Some motorists unwittingly paid 6c/litre more per litre of fuel than they should have on Wednesday morning.

This was before the Department of Mineral Resources and Energy (DMRE) admitted that it had made a calculation error on the announced 81c increase - saying that it was only meant to increase by 75c.

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The department attributed the error to a salary adjustment for service station employees that was already implemented in September's petrol price, but added again in this month's hike.

But the damage was already done for some motorists, who filled up before the error was rectified.

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A Johannesburg fuel station owner, who did not want to be named, said they had already started selling petrol at the 81c increase before the correction was announced.

"It was reported during the day, it was confirmed in the afternoon … it is what it is. We started dispensing the fuel, if somebody wants to have their [6c/litre] back, we’ll gladly give it back, they must just bring their slip," she said.

The station owner said that this was the first time an error like this occurred, but not that many motorists were affected since they had filled up before the increase, on Tuesday, so business had been a little quiet.

Other fuel station owners said that they only implemented the corrected price between 10:00 and midday, with motorists paying the wrong price earlier in the morning. 

"The error by the DMRE validates the AA’s call that a total review of the fuel price, and an audit of all the process and components which comprise the fuel price, is necessary," the Automobile Association (AA) said in a statement.

"While we appreciate that errors occur, the impact of the fuel price on millions of South Africans cannot be underestimated. This error, in fact, must be the catalyst for such a review." 

The AA also objected to the fact that the DMRE stopped publishing a daily fuel price update, which reflected the daily movements of the rand/dollar exchange rate and oil price, and allowed motorists to predict how the fuel price will change at the start of the next month. "Only the monthly adjustment is now being released, (which) means there is no transparency in the process of fuel price determination."

"In the past the daily updates provided some indication of fuel price movements to the public, but that is no longer the case. This, combined with this error by the DMRE (which was not identified by any one of the many people who should review this adjustment before the minister’s official announcement), supports our view that a review of the fuel price is long overdue. We will continue to pressure government to initiate such a review so that all consumers are confident the pricing which is released by the DMRE is accurate and fair," the AA concluded.

Even with the reduced hike, the December price of petrol still pushed past the R20/l mark.

Following a public outcry on the steep increase, the DMRE said in a statement that the hikes South Africa experienced were similar to other record-breaking increases in non-oil producing countries such as Australia, Canada, New Zealand, Singapore and the UK.

"The US - for example - has seen pump prices rise by over 60% in the past 12 months. The attempt by the US government to moderate crude oil prices by releasing strategic oil reserves did little to lower price," said the DMRE on Thursday. 

It explained that the increases were due to a decision by cartel Organisation of the Petroleum Exporting Countries (Opec) and its partners to not ramp up crude oil production, despite global demand going back to pre-pandemic levels.

"The price of crude oil which is the main feedstock for refined fuels has doubled in the last twelve months from about $40 per barrel to over $80 per barrel," said the department.

The second reason for the hikes is because the dearth of heating fuels at the beginning of the Northern Hemisphere’s winter season has led to pressure on diesel and paraffin prices. This has, in turn, resulted in pressure on all heating fuels, which is why diesel and paraffin prices were higher than that of petrol in November.

The DMRE added that it was disappointed by the decision made by Opec and its partners. 

"Increasing oil production is ... well within Opec’s control and for reasons best known to them they are unwilling to use it. The department wishes to discourage comments that seem to suggest that these record-breaking increases are only happening to South Africa," said the department.

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