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The AA’s Call to #ReviewTheFuel

#ReviewTheFuel

Providing cheaper fuels to South African citizens will not happen with the flick of switch but will require a multi-faceted, multi-departmental approach with the involvement of the private sector.

The Automobile Association (AA) believes a comprehensive, long-term analysis of the components of the fuel price needs to be done as a matter of urgency, and that all calculations relating to the fuel price be audited to determine if they are still relevant and appropriate to South African conditions.

Continuing with a pricing model because it’s historically the one the country always used doesn’t make sense; the AA says questions must be asked if there is a better model available and, if there is, if South Africa we should consider replacing the existing one.

The General Fuel and Road Accident Fund levies contribute significantly every litre of fuel sold, but citizens don’t see tangible benefits from these taxes. However, several questions relating to the allocation and utilisation of these funds are raised. For instance, the country continues to fund the Road Accident Fund through fuel taxes but it is poorly managed, and a drain on the country’s resources. Apart from poor management, the issue of whether the country has fully explored alternatives to compensate victims of crashes, and, critically, has the private sector been consulted for their inputs?

Petition outcome

Government heeds calls by AA on fuel levies and pricing model

In a landmark win for consumers, the Minister of Finance, Mr Enoch Godongwane, today heeded calls by the Automobile Association (AA) not to increase the rate of fuel levies, and at the same time announced a “review of all aspects of the fuel price” subsequent to prolonged campaigns and a petition by the AA calling into question perpetual fuel hikes.

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Another major issue is road safety and its associated costs. Government’s last estimate in 2015 was that road crashes cost the economy around R150bn annually. But there must be more of a focus on claims management, and on preventing the need for compensation in the first place.

The AA says private sector involvement in dealing with rising fuel costs has now become inevitable, and it remains committed to working with government in the interest of consumers.

To support the AA’s call for a review of the fuel price, please sign our petition. In addition, you can also support the call by taking to social media and using the hashtags #ReviewTheFuel, #JoinTheMovement and #SupportTheCause. Remember, members of the AA not only benefit from the exceptional services and products the AA provides, but they are also supporting consumer initiatives such as this one.

Mitigating rising fuel costs in South Africa – the AA’s view

Apart from focusing on the fuel price itself, the AA is of the view that extensive research must be conducted into every single element of the fuel value chain which contributes to the fuel price in South Africa. Alternatives must be sought if any elements are deemed too expensive, and each cent which is being charged must be justified.

In April 2021, the AA made representations to the Parliamentary Portfolio Committee on Mineral Resources and Energy, highlighting what it believes are important measures that must be taken to mitigate rising fuel costs in South Africa.

Among the key recommendations made by the AA to the Portfolio Committee on measures to mitigate rising fuel costs were:

1. Investigation of current pricing model

2. Recalculation and audit of existing elements within the pricing model

3. Reduction of the cost of the Road Accident Fund (RAF) to motorists through:

    1. Better management and governance of the RAF
    2. Improved road safety to reduce demand
    3. Better policing
    4. Safer Roads / Safer Drivers / Safer Cars / Better Post-Crash Intervention
    5. Better pedestrian safety education
    6. Privatisation of the RAF, or at minimum semi-privatisation of claims management

4. Better allocation and utilisation of funds from the General Fuel Levy (GFL)

    1. Issues of good governance which impact on the economy and R/USD exchange rate

5. Investment in alternatives to the country’s current reliance on fuel

    1. Improvement of Transnet to alleviate reliance on road freight
    2. Provision of safe, reliable, sustainable, affordable public transport

Mitigating rising fuel costs in South Africa – the AA’s view

Apart from focusing on the fuel price itself, the AA is of the view that extensive research must be conducted into every single element of the fuel value chain which contributes to the fuel price in South Africa. Alternatives must be sought if any elements are deemed too expensive, and each cent which is being charged must be justified.

In April 2021, the AA made representations to the Parliamentary Portfolio Committee on Mineral Resources and Energy, highlighting what it believes are important measures that must be taken to mitigate rising fuel costs in South Africa.

Among the key recommendations made by the AA to the Portfolio Committee on measures to mitigate rising fuel costs were:

1. Investigation of current pricing model

2. Recalculation and audit of existing elements within the pricing model

3. Reduction of the cost of the Road Accident Fund (RAF) to motorists through:

    1. Better management and governance of the RAF
    2. Improved road safety to reduce demand
    3. Better policing
    4. Safer Roads / Safer Drivers / Safer Cars / Better Post-Crash Intervention
    5. Better pedestrian safety education
    6. Privatisation of the RAF, or at minimum semi-privatisation of claims management

4. Better allocation and utilisation of funds from the General Fuel Levy (GFL)

    1. Issues of good governance which impact on the economy and R/USD exchange rate

5. Investment in alternatives to the country’s current reliance on fuel

    1. Improvement of Transnet to alleviate reliance on road freight
    2. Provision of safe, reliable, sustainable, affordable public transport

2021 – An analysis of the fuel price in South Africa

From January to December 2021 ULP95 petrol increased by a staggering R5.87 a litre, while ULP93 petrol increased by R5.89 a litre over the same period. Diesel 0.05 climbed by just under R5.47 a litre over this period, while diesel 0.005 increased by R5.50 a litre. Users of illuminating paraffin were paying R4.83 more in December 2021 than they did in January 2021.

These massive increases, the AA believes, strengthen its call for a review of the fuel price structure, and for a recalculation of all the elements that comprise the fuel price.

 

Fuel price increases/decreases Jan-Dec 2021

2021 – An analysis of the fuel price in South Africa

From January to December 2021 ULP95 petrol increased by a staggering R5.87 a litre, while ULP93 petrol increased by R5.89 a litre over the same period. Diesel 0.05 climbed by just under R5.47 a litre over this period, while diesel 0.005 increased by R5.50 a litre. Users of illuminating paraffin were paying R4.83 more in December 2021 than they did in January 2021.

These massive increases, the AA believes, strengthen its call for a review of the fuel price structure, and for a recalculation of all the elements that comprise the fuel price.

 

Fuel price increases/decreases Jan-Dec 2021