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Friday, July 19, 2024

Fuel Price Deregulation Bill could see a sharp drop to R17.50 per litre

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Amendments to the Petroleum Products Act through the Fuel Price Deregulation Bill could see prices drop sharply to R17.50 per litre if the bill is passed into law.

The parliament is currently processing the proposed law aimed at significantly lowering the cost of petrol in South Africa, says the Democratic Alliance.

The bill aims to amend the existing Petroleum Products Act, which gives the government the power to prescribe the price of petroleum products.

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The primary objective of the Bill is to deregulate the fuel sector to increase competition in fuel price-setting at both the wholesale and retail level, which will be expected to result in lower petrol prices for consumers, as retailers compete to win customers based on price levels.

The bill does this primarily through the removal of Section 2 of the Petroleum Products Act. The bill also amends section 2(1)(d) to allow for businesses to implement creative methods of trading which may result in reduced petroleum prices.

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By ending the additional taxes on fuel, and deregulating the fuel price, the DA estimates that it can lower the price at the pumps by up to R9 a litre.

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“At Friday’s prices, if parliament agrees to the DA measures to lower fuel prices by up to R9 per litre, we would drive the petrol price down to about R17.50 per litre,” said the party’s Kevin Mileham.

“And once price equilibrium is established around this R9 per litre price reduction, with a deregulated fuel price, lower oil prices in due course will mean that the price at the pumps will continue to fall.”

Mileham said that the bill will also give increased powers to the Competition Commission, which will be tasked with keeping a close eye on the fuel price market. Should any anti-competitive practices be determined, swift investigation and remedial action will follow, he said.

South Africa saw its largest petrol price increase on record on Wednesday (7 July). The adjustments announced by the Department of Mineral Resources and Energy (DMRE) include an increase of R2.57 to 95 petrol in Gauteng, which will push the cost of this fuel to R26.74. The increase of R2.37 to 93 petrol will push this fuel price to R26.31, all-new record high prices.

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