Cape Town - The Hawks' battle with Finance Minister Pravin Gordhan is directly responsible for the substantially smaller decreases in the prices of petrol and diesel, pointed out Debt Rescue.
The price of diesel 0.05% sulphur and diesel 0.005% sulphur will drop by 48c and 49c a litre respectively, the Department of Energy announced on Friday. It said illuminating paraffin (wholesale) will cost 47c/l cheaper and illuminating paraffin (SMNRP) 63c/l.
It has been downhill for the fuel price and the currency since the Hawks announced that Gordhan should present himself to the unit over his involvement in the so-called rogue unit at the South African Revenue Service during his time as commissioner
Earlier in August, economists Dawie Roodt predicted a 90 cents a litre reduction in the price of diesel and 60 cents a litre drop in the petrol price.
The Automobile Association (AA) predicted on August 15 that the petrol price would continue its downward trend, with an estimated drop of 69 cents a litre based on the rand's strength. Diesel was predicted to decrease by 94c/l and illuminating paraffin by about 92c/l.
However, with the rand reacting negatively to the Hawks' circling of Gordhan over his involvement in the so-called rogue unit at the South African Revenue Service during his time as commissioner, the AA expected the pump price of petrol to only drop by 25c/l.
Neil Roets, Debt Rescue CEO, agreed with a Bank of America Merrill Lynch research note that predicts the Rand dropping to R16/$ by the end of the year if political uncertainty in the country continues.
“To economists these are just numbers but the reality is that any further depreciation of the currency is a going to have a profoundly negative effect on consumers.
“They have pulled in their collective belt so many times that there is no further room for cutting budgets to put food on the table,” Roets said.
“Even though the drop in the fuel price is smaller than expected, consumers should use the opportunity to reduce their debt load,” he cautioned.
The custodian of the credit industry in South Africa, the National Credit Regulator (NCR) issued a statement warning consumers that times are going to get even tougher.
Nomsa Motshegare, CEO of the NCR advised consumers to take advantage of the price drop in fuel by using the savings to settle outstanding debts. Consumers are also urged to use this opportunity to save for rainy days, she said
Roets said his company was seeing double digit increases in its growth rate largely because of the growing number of deeply indebted consumers who were seeking relief by going under debt review.
“Debt counselling remains the best way for consumers to manage their debt load by negotiating with creditors and paying off their debt in smaller instalments over a longer period of time. None of their assets may be attached by debt collectors while they are under debt review,” Roets said.
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