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Fuel price drop little relief for heavily indebted South Africans

Petrol pump. souce unknown

Petrol pump. souce unknown

Published Jan 5, 2022

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DURBAN - While the prices of fuel will be slightly cheaper from today, calls have been made for the government to urgently look into the fuel price model.

The Department of Mineral Resources and Energy said fuel prices will decrease across the board today:

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  • 93 unleaded petrol (ULP) and leadreplacement petrol (LRP) petrol, the price will decrease by 71 cents per litre.
  • 95 ULP and LRP petrol, the price goes down by 68 cents per litre.
  • Diesel (0.05% sulphur), the price will decrease by 67.80 cents per litre.
  • Diesel (0.005% sulphur), the price goes down by 69.80 cents per litre.
  • the price of illuminating paraffin will drop by 71 cents per litre.

Neil Roets, CEO of Debt Rescue, said that while the fuel price drop was welcome, it was cold comfort for South African motorists who continue to pay extraordinarily high prices for fuel.

“We saw massive cost increases come into effect in November and December. This latest adjustment thus effectively took us back to where we were in November price-wise, which at the time was seen as catastrophic for motorists. As much as we are grateful for the halt in the upward trajectory of prices, we are definitely not out of the woods.”

Roets added that calls had been made for Minister of Finance Enoch Godongwana to address the issue.

“As we head towards the National Budget Speech in February, all eyes will be on the government to better understand how they will review how the petrol price is calculated, as consumers are currently being fleeced at the pumps. This is a situation that is unsustainable and which has a major impact on consumers and household spending patterns and debt levels across the board.”

Roets said that South Africans are significantly indebted, so slight decreases will be marginally felt.

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“Furthermore, with close to three-quarters of South Africans not having enough money to make it through January, even with these decreases, many will continue to feel the pinch as they grapple with their financial obligations into the New Year.”

Roets added that more consumers will be forced to turn to credit to pay for everyday costs.

According to a recent PayCurve survey, almost 80% of South Africans take out expensive unsecured loans to cover their monthly financial obligations.

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“This is a vicious cycle and one that can end in an expensive legal battle with creditors. For those who find themselves in this circumstance, there is relief in the form of debt counselling: all existing credit is paid off monthly, while any further legal action is prevented.”

Henk van de Graaf, regional chairperson: north for agricultural organisation, TLU SA, said they are delighted with the price decreases.

“Recently, many complaints have been received from members and other farmers regarding the huge price increases in, among other things, fertilisers and various commodities that farmers need to put food on everyone's table. With further investigation, the increases in fuel prices and transport costs are the main reasons.”

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De Graaf added that TLU SA would be monitoring whether the price cuts reach the consumer.

“TLU SA will pay particular attention to the fact that farmers experience relief at their traditional purchasing points, and we call on companies that are suppliers to the farmers, to indeed pass on the relief, especially since farmers remain price takers, while the high input costs make it difficult to produce more sustainably.”

THE MERCURY

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