Treasury’s official proposals to lower South Africa’s petrol prices – including a fuel price cap

The National Treasury has detailed its official proposals to tackle South Africa’s record-high petrol prices.

In a presentation to parliament on Tuesday (15 March), Treasury said that it had narrowed down its proposals to four options, with a combination of these proposals likely to be the most effective:

• A potential one-off reduction of between 3 cents – 18 cents/litre as part of a recommended Basic Fuel Price review which could be introduced immediately;

• A review of the Regulatory Accounting System (RAS) methodology for petrol could result in a significant decrease of R1.03 cents/litre by 2028. However, this will take significantly longer to implement than other measures and investigations need to take place to fully understand the changes that can be implemented.

• Revising the Road Accident Fund Levy to make up a lower total of the current Basic Fuel Price. Currently, National Treasury regulated levies account for 30% of the total pump price. Treasury said a reduction in the RAF levy should be possible as the Road Accident Fund sees operational changes and improvements over the next three years.

• Consideration should be given to a fuel price cap, although this will also require significant investigations will be required first.

Treasury’s position on a Basic Fuel Price review conflict somewhat with a preceding presentation by the Department of Mineral Resources and Energy.

In its presentation, the department said that it did not think a fuel price review would be as successful as offering transport and food subsidies.

It also proposed other interventions such as encouraging people to work from home – and in a worst-case scenario – limiting the fuel that motorists are given at petrol stations.

It reasoned that the record-high petrol price was largely an international issue, and was being driven by geopolitical factors outside of South Africa’s control, meaning a fuel price review would largely be ineffective.

Read: Government warns of possible petrol restrictions in South Africa