Energy dept says too early to tell if fuel prices will continue to drop

JOHANNESBURG – The Department of Energy says it’s difficult to tell if fuel prices will continue to drop after January.

The department announced on Friday the fuel price will decrease by more than R1 a litre for both petrol and diesel next week Wednesday.

The price of 93 octane petrol will decrease by R1,22 cents a litre while 95 octane goes down by R1,23 cents.

Illuminating paraffin will cost R1,23 cents less.

The department’s Robert Maake said: “It’s a bit difficult to tell but crude oil prices are positive. The only problem is the exchange rate which is going the opposite direction [and] we will see in the next few weeks what happens.”

At the same time, economists say going into the new year South Africa’s economic standing largely depends on how Parliament deals with land reform, the upcoming general elections as well as cleaning up state-owned entities (SOEs).

Following the Energy Department’s announcement on Friday, the fuel price is expected to drive the country’s economic outlook.

The department says the current fuel price adjustment is due to the lower crude oil prices and a weaker rand.

Economist Peter Attard Montalto says SOEs need to be cleaned up.

“In the case of all of these companies as we are seeing at the SABC but also coming up at Eskom. There is going to be the need of very deep and political painful job cuts in the SOEs to make them financially viable.”