South Africa’s fuel price hikes receiving ‘special consideration’ by cabinet

South Africa faces record-high petrol prices in June, failing further intervention from the government. And time is running out.

Absa economists estimate that prices could rise by as much as 16% month-on-month should the R1.50 a litre reduction in the fuel levy not be extended. That would see prices close in on R25 per litre, based on data from the Central Energy Fund.

The latest CEF data shows an average under-recovery on petrol of between R2.32 – R2.43 per litre in June, before the R1.50 levy is added.  The current petrol price is R21.84, and R21.99 for diesel, which currently shows an under-recovery of R1.06 – R1.09 per litre in June.

Minister in the presidency Mondli Gungubele was asked at a post-cabinet meeting on Thursday whether the levy waiver will be extended. He said the matter should be referred to National Treasury, News24 reported.

The Democratic Alliance said that Gungubele’s claim that the issue of the impending fuel price increase was receiving ‘special consideration’ by the cabinet is not only an excuse to buy time but an attempt to hide the government’s failure to free South Africans from high fuel taxes.

It said that Gungubele gave the false assurance that ‘…whether the government will intervene again and ensure that fuel prices remain reasonable as it’s a matter that affects the entire country is receiving special consideration…’.

“It does nothing to provide relief to consumers…and the resultant domino effect that this increase will have on the already high prices of food and transport costs,” the opposition party said.

It said that Gungubele’s assertion contradicts the statement made by the energy minister, Gwede Mantashe, who earlier this week said that the general fuel levy cut would not be extended beyond the end of May.

“The contradictory positions coming out of Cabinet confirm the ANC government’s enduring failure to respond effectively to rapidly rising prices of fuel.”

The DA has presented what it deemed “a workable solution to lower the cost of fuel and promote competitive pricing”. The proposals are centred on removing the ANC government’s artificially inflated fuel prices, which cost 33% more due to the General Fuel Levy and the Road Accident Fund (RAF) levy.

The cost of fuel can be further reduced by deregulating the fuel sector to spur competition between sellers, as per the DA’s pending Private Member’s Bill. The bill aims to codify, through legislation, the deregulation of the fuel price to encourage competition between wholesalers and retailers.

The bill will seek to protect the consumer from exorbitant price increases by decoupling the basic fuel price from government taxes and levies, the DA said.

“The timing of this massive petrol price hike could not be worse, with South Africans battling under the weight of 46% unemployment, rolling blackouts, irrational Covid regulations, flooding, drought and collapsing service delivery. South Africans simply cannot afford to pay R25 per litre for fuel,” it said.

Read: Parliament to debate South Africa’s record petrol price hikes – as country faces ‘perfect storm’

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South Africa’s fuel price hikes receiving ‘special consideration’ by cabinet