Petrol price hike: S.Africans urged to cut costs

The Energy Department announced last night that the price of petrol will go up by 96 cents a litre.

FILE: The petrol price is expected to go up from 4 March. Picture: EWN.

JOHANNESBURG - As motorists brace themselves for next week's fuel price increase, South Africans have been urged to find areas where they can cut their expenses.

The Energy Department announced last night that the price of petrol will go up by 96 cents a litre while a litre of diesel will cost 74 cents more.

The petrol price is expected to go up from 4 March and will be the first increase in the fuel price after it hit record lows last year.

The last time petrol increased was in April last year by 7 cents a litre and before that in March when it increased by 36 cents a litre.

Economist Chris Hart warns things could get tougher if crude oil prices continue to rise.

"The big drop that we had until February this year was going to be undone over the next two months, through taxes and the rebound in the international oil price. It means the Reserve Bank might be looking to hike rates."

Meanwhile, another economist Xhanti Payi says a weakening rand is not making it easy for consumers.

"We import quite a lot in South Africa, which means that as the rand weakens, prices of imports will be going up. There isn't really a lot of promise given the announcements of the past week."

At the same time, PetroSA is considering the possible retrenchment of up to 40 percent of its staff.

Economists say next week's fuel price increase will leave Eskom with very little room to manouvre as it battles to provide stable electricity supply to South Africans.

Eskom has reported financial problems which threatened some of its diesel powered operations in recent months.

Payi says the utility won't be spared from the rising cost of fuel.

"Eskom is struggling to be able to buy diesel because of their financial problems. So this compounds the problem as they were struggling to buy diesel at its very cheapest."

Hart says crude oil prices could still fall.

"Although the oil prices rebounded from the $43 barrel level, to above $60 dollars a barrel, there's still quite a big glut of oil in the market and demand is still weak so it's quite possible oil prices will get back to previous levels."