Petrol ‘holiday’ proposed for South Africa

Parliament’s Portfolio Committee on Mineral Resources and Energy has recommended that the government introduce a ‘tax holiday’ or exemption on the country’s fuel products for a limited period.

In a meeting held on Tuesday (29 March), the committee said this should be considered as an immediate response to the country’s record-high petrol prices, and is separate from the general review of the country’s basic fuel price over the longer term.

A significant portion of South Africa’s basic fuel price is currently made up of levies controlled by the National Treasury, with approximately R3.93 of every litre going to the basic fuel levy and R2.18 going to the Road Accident Fund Levy.

Experts have suggested that government could scrap or lower these levies over the short-term to help cushion the blow of further price increases in April and May – and make up the shortfall from other areas of the budget.

The committee said South Africa was now facing a petrol ’emergency’, but that the intervention may only be necessary for a two-month period, with the RAF levy a specific point of contention.

The latest data from the Central Energy Fund (CEF) shows South Africa is on track for a petrol price increase of between R1.80 and R1.93 in April. Diesel is expected to increase by between R3.00 and R3.14.

Finance minister Enoch Godongwana has indicated that the government is in talks to soften the impact of record petrol price hikes in South Africa over the coming months.

Responding to oral questions in parliament on Wednesday (23 March), Godongwana said that this intervention would likely be temporary, with the National Treasury and Department of Mineral Resources and Energy (DMRE) also considering long-term options to help alleviate fuel prices.

Godongwana did not specify what exact measures would be introduced as the discussions are private and still ongoing.

“Work is being done in this regard. What is making the matter more urgent is the impact of the Russia-Ukraine conflict which is moving the price of oil faster than we have thought.

“The work we are doing is intended to address the immediate challenge we are facing, and a decision will be announced fairly soon.”

He added that it is the intention of the government to take some ‘urgent steps’ for April and May specifically.

Read: Ukraine war isn’t the only reason for skyrocketing petrol prices in South Africa: economist