YESTERDAY’S fuel price increase in South Africa is set to have a knock-on effect on Lesotho with the Petroleum Fund Lesotho expected to make a decision next week.
South Africa increased the price of petrol by up to 50 cents per litre, with diesel increased by 39 cents. The wholesale price of illuminating paraffin was increased by up to 58 cents per litre, while Liquefied Petroleum Gas increased by R1.06 per kilogramme.
The South African Department of Energy attributed this week’s petrol price increase to several reasons including higher international prices for oil and the weak performance of the rand against the US dollar.
“The average international product prices of petrol, diesel and illuminating paraffin increased during the period under review,” the statement said.
“The average rand/US dollar exchange rate for the period 2-28 December 2016 was 13.8704 compared with 13.9125 during the previous period.
“This led to decreases in the contribution to the basic fuels price on petrol, diesel and illuminating paraffin by 1.82 c/l, 1.75 c/l and 1.76 c/l respectively.”
Another factor that contributed to the increase in the prices of crude oil was the agreement by Organisation of the Petroleum Exporting Countries (OPEC) members to cut production by 1.2 million barrels per day from 1 January 2017 during their 30 November 2016 meeting in Vienna, Austria.
Russia and other non-OPEC producers also agreed to cut production by 600 thousand barrels per day.
It is also attributed to the increase in the prices of petrol, diesel and illuminating paraffin in the international markets. The Basic Fuel Price of all the products increased in line with the increase in the price of crude oil.
With Lesotho’s fuel prices taking the cue of those in South Africa, the Petroleum Fund Lesotho — a government entity mandated to regulate petroleum fuel prices and standards – is expected to announce a fuel price adjustment.
Petroleum Fund Lesotho Operations Manager, Lebohang Makhoali, this week told the Lesotho Times any decision by the secretariat would only be known after their return from the holiday period on 9 January 2017.
“We can only know the decision when the board sits after they return from the Christmas holiday,” he said.
Higher fuel costs would place particular strain on already tight household finances. Not only will motorists have to pay more for fuel, but also face steeper food prices.