Page 18 - DMEA Week 10 2021

DMEA NEWS IN BRIEF DMEA

national summit on the integration of FUELS bottleneck-induced input cost pressures ““ not
artisanal, modular refineries in the country. just in South Africa but also globally ““ this
Senior Special Assistant to the President Brace for more petrol price raises upside risks to South Africa’s headline
on Niger Delta Affairs, Senator Ita Enang, CPI inflation forecast.”
disclosed this while addressing newsmen in hikes in South Africa The BER said that the headline CPI is
Abuja, said most of the issues to be addressed currently projected to average around 4%
are such issues that will require legislation. Economists have warned that a surge in global during 2021.
According to him, the conference is intended oil prices, coupled with a weaker and the Taxes and levies on fuel currently make up
to formally announce the convening and introduction of fuel taxes mean that South the majority of the fuel prices ““ something
holding of a National conference on artisanal Africans will pay more at the pumps in the that was not always the case.
and modular refineries in the country for the coming months. According to lobby group Outa, the Basic
purpose of integrating local refining capacity The price of Brent oil surged above $70 Fuel Price (BFP) ““ which is mainly affected
into the refining of petroleum products in a barrel on Monday (8 March) after Saudi by the international oil price and the rand/
Nigeria, namely petrol, diesel, kerosene and Arabia said the world’s largest crude terminal US dollar exchange rate ““ made up the largest
other petrochemical products. was attacked. component of the fuel price between 2009 and
He added that the essence of the However, the surge is just the latest in a line 2014.
conference is to mobilize all Nigerian assets of increases, with prices also extending higher However, with government increasing
including technologies engineers, intellectuals on Thursday after the OPEC+ oil grouping taxes and levies over the past decade, the BFP
of all disciplines, including persons who have surprised with a decision to keep its output component now accounts for a much smaller
been operating, handling and producing quota unchanged. portion of the price.
petroleum products at the creeks. These increases mean that the oil price has Direct fuel taxes ““ being the fuel levy
“Their works are damaging to the gained more than 30% so far in 2021. and road accident fund levy ““ account for
environment, we call them illegal refinery “The combination of a fast-rising oil price R5.88 of the fuel price; however, Outa said
operators. They are also called domestic and a weaker South African currency pushed that the various taxes and levies that make up
refinery owners operators of Nigeria and they the rand oil price even higher last week the “non-petroleum related costs” ““ which
are represented here by their Chairman, we to levels last seen in the second quarter of includes things like the wholesale and retail
have mobilized them and they will be present 2019,” said economists from the Bureau for profit markings, and a few smaller transport
at the event” , he said. Economic Research (BER). and storage costs ““ push this up to R9.48.
Enang stated that the conference will be If this is sustained, the group warned that In March 2021, this is 58% of the current
holding on the 16 and 17 of March 2021 South Africa will see another large petrol price price (95 grade).
at Sheraton Hotel, Abuja. He emphasized increase in April. April will see further tax hikes around fuel
that the intent of the conference is to “The elevated rand oil price will add to come into effect, with a significant addition
mobilize resources that can bring the price the combined 26c/litre rise in the general of 26 cents a litre to fuel prices because of
of petroleum products to as low as N100 per fuel levy, Road Accident Fund and carbon increases to the General Fuel and Road
litre. levies set for April announced in the February Accident Fund levies. These were announced
“As the cost of crude goes higher, the cost budget.” by National Treasury in the 2021 budget
of refined petroleum products goes higher, It added that the domestic petrol price has speech.
if we refine these petroleum products in already increased by a cumulative R1.86/litre BUSINESS TECH
Nigeria the cost will be very low” , he added. in the first three months of the year.
Senator Ita Enang, however, explained that the “Driven by the much faster-than-expected Delek expects $1.7bn of
urgency of hosting the conference is because oil price increase so far in 2021, the petrol
the National Assembly has promised to pass price averaged somewhat higher than Leviathan gas sales in 2021
the Petroleum Industry Bill, PIB, by April this expected between January to March 2021.
year. Importantly, the price will start Q2 2021 Israel’s offshore Leviathan field will sell about
VANGUARD notably higher than we projected in early $1.7 billion of natural gas in 2021, or around
2021. 10 billion cubic meters (BCM), about 12%
“Along with growing indications of more than previously forecast, Delek Drilling

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