Cash-strapped South Africans might be in for price and tariff hikes in July

JUNE 18, 2015

Cash-strapped South Africans might be in for a series of price and tariff hikes in July when the National Electricity Regulator of SA (NERSA) is expected to make a decision on whether to approve Eskom’s request for an additional 12.6% tariff hike – which, according to economists could also see the Department of Energy increasing petrol prices.

The price of petrol is expected to increase by between 40 cents to 50 cents per litre, according to report by Business Tech while Paul Joubert, a Senior Economic Researcher at the Solidarity Research Institute, expects the price of 95 octane petrol to rise by around 52 cents per litre, while the price of 93 octane petrol is expected to increase by around 38 cents per litre.

“These figures can still change as the month goes on, but they are unlikely to change very significantly,” Joubert was quoted saying.

“So far during June the international prices of 95 and 93 octane petrol have risen, while the rand has, on average, been weaker against the dollar than it was on average during May.”

There have been steep petrol price increases in March, April and June when the price of petrol rose by 96 cents per litre, R1,62 cents per litre and 47 cents per litre respectively.

Diesel vehicle owners will smile though as the wholesale price is likely to increase by about 8 cents per litre - driven by declining international diesel prices.

“The international price of diesel has decreased marginally as the demand for diesel drops due to the northern hemisphere’s summer months, resulting in a lower increase for diesel,” said Joubert.

The Department of Energy is expected to make a final announcement on petrol price changes on 26 June, while NERSA is expected to make a decision by the end of June - bringing the total electricity tariff increase to 25.3% this year.

“We will publish Eskom’s application on the NERSA website and we will also invite written comments from the public and stakeholders, and on 23 and 24 June we will have a public hearing on the application. The decision will be made on 29 June,” NERSA spokesman, Charles Hlebela, told EWN last month.

Meanwhile, the consumer inflation rate in May rose to 4.6% – the highest level reached this year, leading some economists to believe it could sway the SA Reserve Bank’s (SARB) Monetary Policy Committee to raise interest rates when it meets next month.

In May, SARB Governor, Lesetja Kganyago, kept the repo rate unchanged at 5.75% where it has remained since July last year, but he warned of an inevitable increase this year as a result of an electricity price increase, the weak rand exchange and government wage settlements.

Last week SARB Deputy Governor, Daniel Mminele, warned that the bank could change its monetary stance as the risk to the inflation outlook rises, as well as an expected rate hike in the US by year-end.

---additional reporting Business Tech and EWN.