Monster fuel hikes may hit SA motorists in October, warns AA

The biggest fuel price hike in South Africa's history could take place in October, the Automobile Association said on Thursday.

It was commenting on mid-month unaudited data from the Central Energy Fund.

"A spike in international oil prices and a huge swing in the rand/US dollar exchange rate have combined to predict a knockout blow at the pumps at the end of September," warned the AA in a statement.
 
"Based on the current data, petrol users will be paying R1.12 more per litre, with illuminating paraffin costing R1.17 more."

It expects diesel users will be hit hardest, with a possible price hike of R1.38 per litre, pushing diesel to within a whisker of R16 per litre.

"To put this in perspective, should this increase materialise, it will push the price of 93 unleaded octane fuel inland close to R17 a litre, off a January price of R14.20 – a total increase of around 20%, year-to-date," said the AA.
 
The association said a massive hike in the diesel price will be catastrophic for the agricultural sector, which is already reeling from the prolonged drought.

Extreme fuel price hikes could push marginal businesses, including farms, to financial breaking point. 

"While we earnestly hope the picture improves before month end, we once again call on the government to urgently address the policy and structural issues which have put fuel users in the front line of the rand's weakness," implored the AA.

• READ: Radebe flags October fuel price outlook as 'major concern'

Energy Minister Jeff Radebe warned on Wednesday that increasing rand weakness does not bode well for the fuel price in October, 

The minister attributed the rising fuel price to international oil prices, and increases in the fuel and road accident fund levies which were approved by Parliament earlier this year.

Radebe added that a task team, consisting of his department's officials and National Treasury, is reviewing the basic pricing system of the fuel. It is expected to report progress before the end of September.

At the beginning of the week, Rabede said government had little choice but to subsidise September’s petrol price increase, a decision that preceded the announcement of South Africa slipping into a recession.

He said it was a "one-off" measure in response to the very negative economic climate.

* Sign up to Fin24's top news in your inbox: SUBSCRIBE TO FIN24 NEWSLETTER