New fuel formula kicks in

2 April 2003

Motorists are set to benefit from the new fuel pricing formula which comes into effect this week, and will pay about R1-billion less per year than they would have under the old system.

Rob Crompton, deputy director in the department of minerals and energy, said the new method, called the Basic Fuel Price, had already saved motorists about 10 cents after the department announced an increase in the price of petrol by three to six cents on Tuesday.

Under the old system, the In Bond Landed Cost, which Crompton said was outdated, the petrol price would have been increased by 13 cents.

Crompton said the new method was based on so-called spot prices reported daily, as opposed to the old method, where prices were reported on a ‘long contract’ basis.

“This change is necessary because there have been changes in global markets that have been determined by careful investigation,” he said.

The department announced on Tuesday that motorists would pay between three to six cents for petrol per litre at the coast and inland regions, while paraffin and diesel will increase by eight and 24 cents at the coast and inland respectively.

Crompton said, however, that the petrol price would still be influenced by the dollar-rand exchange rate, and would be reviewed every month.

“This new way of determining the petrol price is expected on average to bring lower prices. However, it must always be borne in mind that in a global economy, local prices will reflect international oil prices,” Crompton said.

Source: BuaNews