South Africa adds a levy of 87.66 South African cents per litre to fuel prices — Daily Maverick

According to Daily Maverick, South Africa has added a levy of 87.66 South African cents per litre to the price of petrol and diesel. It was introduced to partially cover the accumulated deficit in the fuel price regulation mechanism. Ahead of the price increase on Wednesday, 7 October, the publication's journalists found that petrol was unavailable at two filling stations in Macassar and Eerste River.

The owner of a filling station in Khayelitsha told the publication that small operators paying in cash are particularly affected by high fuel purchase prices.

Deficit in the regulation mechanism

The slate levy is a temporary variable charge that can be added to or deducted from the price of petrol and diesel. It is used to cover accumulated deficits or return surplus funds. The levy is charged when the total negative balance exceeds 500 million rand.

According to Daily Maverick, at the end of August, the combined balance for petrol and diesel stood at minus 10.456 billion rand. The levy of 87.66 cents per litre is intended to help offset this amount.

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South Africa depends heavily on imports of refined petroleum products, including diesel. As a result, higher costs of delivering finished fuel affect its price in the country.

More expensive routes and insurance

Daily Maverick links rising supply costs to Houthi attacks on Saudi Arabia's oil infrastructure and maritime routes. According to the publication's assessment, due to danger in the Bab el-Mandeb Strait, tankers heading to Europe and Asia were forced to sail around southern Africa. This increased voyage durations by 15–29 days and reduced the availability of the tanker fleet.

The publication cites data showing that daily charter rates for supertankers rose from $30,000–$60,000 to $642,000–$1.3 million. The cost of seaborne oil transportation increased from $3 to $23–$33 per barrel, while war-risk insurance for vessels in the Red Sea rose from less than 1% to 3–7% of the vessel hull value.

According to Daily Maverick's assessment, the diesel refining margin, meaning the difference between the price of finished fuel and crude oil, increased from about $20 to $110 per barrel. Together with the rise in oil prices to $100 per barrel, this lifted the price of delivered diesel from $85 to $210 per barrel.