Big fuel price cut forecast for next month

THE Department of Minerals and Energy could implement a retail petrol price cut of about 71c/l on May 1‚ provided the daily over-recovery remains near the level of that of April 12. The wholesale diesel price could fall by a more subdued 49c/l.

The daily petrol price over-recovery was 97.703c/l on April 12 after reaching an under-recovery of 100.661c/l on January 29. The change in the daily petrol price in January was largely due to the weakening rand‚ which moved from R8.5148 per US dollar on January 1 to R9.0675 on January 29‚ while in April the major factor was a fall in international product prices.

The average over-recovery for the period March 27 to April 12 was 52.737c/l of which lower international product prices accounted for 49.004c/l‚ while the stronger rand exchange rate only accounted for 3.733c/l.

An over-recovery means the basic petrol price based on the daily product price and exchange rate is less than the basic fuel price used in the calculation of the monthly retail petrol price.

An over-recovery, therefore, implies that the retail petrol price will most probably be decreased at the next monthly price adjustment‚ provided the government does not introduce a new levy or raise either the wholesale or retail margin.

The retail petrol price is adjusted on the first Wednesday of the month in accordance with the previous period’s over- or under- recovery.

The averaging period runs from March 27 to April 25 and an announcement is due on April 26. – I-Net Bridge