Effect of domestic levies on fuel price

1. The general fuel levy will go up by 23 cents per litre (cpl) for petrol and 24 cpl for diesel;
   
2. The Road Accident Fund levy will go up by 17.5 cpl for both petrol and diesel.
   

Quite simply, the effect of this will be an increase of 40.5 cpl in the pump price of petrol (23 cpl + 17.5 cpl), and 41.5 cpl in the price of diesel (24 cpl + 17.5 cpl).

Local versus global

Engen Petroleum's GM of Corporate Planning, Dave Wright, says these levies belong to a range of domestic influences on the price we pay for diesel and petrol.

As they rise and fall, so does the price of fuel.

But a number of global factors also influence the fuel price, notably international fuel prices and the rand-dollar exchange rate.

The global section is referred to as the Basic Fuel Price (BFP), while the domestic section is made up, among other factors, of various SA taxes and levies.

He says both domestic and global factors have a contributing effect on the end price of petrol and diesel, but to determine the net movement of the price of petrol and diesel in any one month, both sets of variables must be read together.

Reading domestic influences

The table below sets out the amounts and movements in domestic levies and taxes for all grades of fuel between February and 1 April 2009 (assuming no change in the international prices and the R/$), and the effect this will have in April 2009. The data reflects the coastal prices.

click to enlarge

Glossary

IP Tracer levy: an amount added to the price of diesel to pay for tracer material added to illuminating paraffin, which allows authorities to trace IP in diesel, a practice not recognised by engine makers

Fuel levy: determined by Treasury as part of government tax.

Customs & excise duty: A levy collected in terms of an agreement with the Southern African Customs Union.

RAF levy: this is the Road Accident Fund levy which is set by the Minister of Finance, to compensate third-party victims of motor vehicle accidents.

Petroleum Products levy: generates the part of the funds used to run the National Energy Regulator (NERSA)

Slate levy: An amount subtracted (or not) by the Department of Minerals and Energy, to ensure oil companies are compensated for any shortfalls in the price they charge for fuel (calculated monthly), as against international prices (calculated daily).

DSML: Demand-Side Management Levy - added to 95ULP in Gauteng, to control the volume of 95 ULP consumed in the Inland region, since it is not needed for the smooth functioning of engines in that region.

Incremental Inland Transport levy: A levy allowing oil companies to recover some of the additional cost of transporting fuel by road.

Other: Besides government-imposed factors, the fuel price also contains compensation to oil companies for storage, handling and distribution costs, a fixed wholesale margin and a retail profit margin.