(Business Insider South Africa)
(Business Insider South Africa)
  • The department of mineral resources and energy on Wednesday revised the official petrol price downwards by 6c.
  • It said it had made a mistake in the margin paid to retailers, incorrectly factoring in a wage increase for service staff.
  • But its documents show that accounted for only 5.7c of the mistake.
  • The rest came from a quiet adjustment to the basic fuel price, the objective, audited number that makes up nearly half the final petrol price.
  • It has yet to explain why.
  • For more stories go to www.BusinessInsider.co.za.

On Wednesday, the price of petrol increased by 81c per litre, taking the price of one litre of 95-octane petrol in Gauteng to R20.35 – but only briefly.

That officially-announced price increase had been a mistake, the department of mineral resources and energy (DMRE) said, and the price increase would actually be 6c less, at 75c per litre.

The difference amounts to some 0.3% of the price, but the error – in what is arguably South Africa's most important closely-watched administered price – was an embarrassing one.

"Although it is for the very first time that such an error has occurred in the history of basic fuel price determination in South Africa, the DMRE profusely apologises for the inconvenience caused," the department said.

But its explanation for what happened doesn't quite add up.

"The 6 cents difference is due to the fact that the adjustment of wages for service station workers had already been implemented in September 2021," it said.

However, its own breakdown of the final petrol price shows that the change in the margin reserved for petrol-station owners makes up only 5.7c of the difference. The other 0.3c came in an adjustment to the basic fuel price (BFP).

The breakdown of the December petrol price first p
Before and after: the breakdown of the December petrol price first published by the DMRE (left), and the corrected version (right).

The breakdown initially set the basic fuel price at 973.97 cents, but the corrected version has it at 973.67 cents instead.

The difference is 0.03% and amounts to nothing more than a rounding error, smaller than the type typically having been swallowed up by "pump rounding", which is used to avoid final prices with fractions of cents.

But the change is in what is supposed to be an objectively and transparently determined – and closely audited – number, which makes up the single biggest part of the final price.

The basic fuel price is calculated not by the department directly but by the Central Energy Fund (CEF) in order to "prevent manipulation by any interested party", the DMRE's predecessor department previously said. The CEF does so following a set of working rules that takes into account everything from the price of crude oil to shipping and insurance costs, and the result is independently audited.

In response to questions from Business Insider South Africa, the DMRE said "retail prices are rounded off to the nearest cent, so if you deducted 5.7 cents you then take the difference into the BFP which is very minimal.

"This is usually the case when there are part cents in the variables so in effect the BFP was not incorrect, it was just updated with the correct movement."

It had not disclosed the basic fuel price change because, "[w]hen the Department announces changes, it is the movements in the fuel price not the specific components". 

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