By Barbara Hollands and Shaanaaz de Jager
THE shock decision by the Energy Department to increase the petrol price by a staggering 66 cents a litre at the coast has stunned the Eastern Cape, with some business chambers even suggesting it could “kill the economy”.
Border-Kei Chamber of Business executive director Les Holbrook said the price increase, which kicked in today (Wednesday) was “unbelievable”. Automobile Association public affairs head Gary Ronald was equally despondent, saying the fuel price had never been this high. “It is not necessarily the highest increase but certainly the most paid for fuel in South Africa,” he said.
In February, Finance Minister Pravin Gordhan announced the fuel levy and the road accident fund levy would increase. This has now been included in April’s increase. Diesel has increased by 47.6c at the coast and paraffin by 20.6c. Ronald said another increase could “probably be expected in May”.
He said the price of fuel was being seriously affected by political unrest and uncertainty in the Middle East and North Africa and the European economic crisis. “This is an unfortunate reality of life and it is not restricted to South Africa.”
Hustler said consumers and businesses would feel the pinch. “An increase in fuel prices affects logistics, as transport costs are directly affected.” Hustler said the hike would impact on the competitiveness of local industry in the international market and increase the threat of business failures and job losses, which the region could “ill afford”.
Holbrook said: “The price increase will kill the economy. It affects every single person and will affect the rate of inflation and cost of living dramatically. It is staggering.”
Econometrix analyst Laura Campbell said the latest price rise included the fuel levy increase of 20c a litre, a road accident fund levy of 8c/l, and 4c/l to fund the oil pipeline between Johannesburg and Durban. “The rest (of the increase) is the under-recovery of the petrol price,” said Campbell. However, she said the effect on inflation would be “negligible” as fuel prices were also rising during the corresponding time last year.
This is a shortened version of an article that first appeared in the print edition of Weekend Post on Saturday March 31, 2012.