Government warns of possible petrol restrictions in South Africa
The Department of Mineral Resources and Energy is considering a number of interventions to address South Africa’s record-high fuel prices – including the possible introduction of fuel limits.
In a presentation to parliament on Tuesday (15 March), the department said high fuel prices are a global issue driven by Russia’s invasion of Ukraine and the subsequent rise in oil prices.
It added that there is a lingering post-pandemic impact being felt in the energy market, as oil suppliers underestimated the rebound of countries following successful vaccination campaigns, and the global economy is now consuming slightly more than what is being produced – leading to upward pressures on the oil price.
The department said that increases of R2/litre should be expected over the coming period, with developing economies such as South Africa likely to see diminished economic growth.
If the situation deteriorates further, the department confirmed that it will consider introducing fuel limits – including restrictions on how many litres each motorist are allowed per visit.
It provided the example of a motorist being limited to 50 litres of fuel per petrol station visit. However, it said that this would largely be a ‘worst-case scenario’ and that the situation will hopefully be avoidable as diplomatic efforts between Russia and Ukraine continue.
Other interventions
The department said it will also push for subsidies for public transport and food production instead of freezing fuel taxes in the country.
It noted that this was the preferable option as there are already existing frameworks around taxi support and easing food costs.
Other proposals include encouraging more employees to work from home and increasing speed limits to further maximise fuel saving.
The department said it is also pushing for broader national changes in a move to become more self-reliant. This includes further energy exploration in the country, investments in local refining and a move to stop the Sapref refinery from shutting down. It will also encourage a shift to biofuels and introduce quotas on diesel exports.
It said that reformulation of the Basic Fuel Price would largely be ineffective as the current record high price was being driven by geopolitical factors outside of the government’s control.
While Treasury decided not to increase fuel levies in its February 2022 budget, it said that this money would still have to come from somewhere. It added that it could not ‘freeze’ the petrol price as it did in 2018, as the slate account does not have the same financial resources as four years ago.
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