Issued by: Minister of Mineral and Energy Affairs
Since 5 October 1994, petrol, diesel and illuminating paraffin prices are adjusted on a monthly basis in terms of a mechanism agreed to in the Liquid Fuels Industry Task Force and approved by Cabinet. The prices are adjusted on the first Wednesday of every month, according to the fluctuations in the rand/dollar exchange rate and international oil product prices. Petrol, diesel and illuminating paraffin each have their own different international price. Product prices more or less follow the fluctuations in the crude oil price, but can vary according to conditions on the international market. The CENTRAL ENERGY FUND calculates the latest petrol, diesel and illuminating paraffin prices for South Africa for the following month. Their calculations are checked by independent auditors. This figure is then announced in the Government Gazette and the media. The new system of price adjustments has worked well and has been widely welcomed.
However, as a result of normal market factors and a particularly severe winter in parts of the northern hemisphere, the international price of both diesel and illuminating paraffin have escalated significantly over the last three months. This has resulted in drastic increases in the local prices of both these products, but particularly illuminating paraffin. These price increases have become unavoidable in terms of the price-setting mechanism agreed to by the Liquid Fuels Industry Task Force and approved by Cabinet.
In terms of the agreed price mechanism and due to the rise in demand in parts of the northern hemisphere, the price of illumi- nating paraffin is due to increase again for February 1996 by not less than 13 cents per litre.
Illuminating paraffin is extensively used by the poorer sections of our population. I realise that these recent increases are placing an onerous burden on those consumers who can least afford it.
To cushion the effect of this latest paraffin price increase, and after consulting the Minister of finance, Mr Chris Liebenberg, I have decided as an emergency measure that the Equalisation fund levy of 7 cents per litre on paraffin be temporarily suspended for two months with effect from 7 February 1996.
The price of illuminating paraffin with effect from 7 February 1996 will therefore be increased by 6 cents per litre rather than the 13 cents increase required in terms of the agreed price mecha- nism. Whilst I realise the implications of deviating from market forces, I have requested the Liquid Fuels Industry Task Force as a matter of urgency to reconsider the basis on which the illuminating paraffin price is determined. The Minister of Finance and myself will also give this important matter our further attention.
Enquiries: Roland Darroll
Phone: (o) (012) 322 8695 (021) 462 2310 (h) (012) 43 3394 Cellular) 082 552 7994