Government expected to intervene on petrol prices in South Africa: finance minister

 ·30 May 2022

The government is set to announce further interventions on the petrol price as the country faces a potential record hike of R4 per litre on Wednesday.

Officials from the National Treasury and Department of Energy met this past weekend to discuss possible interventions, with an announcement expected to be made sometime this week, finance minister Enoch Godongwana told BusinessDay.

He said that the government is aware that price hikes not only impact transport costs but will also lead to a higher cost of living for citizens.  “Everyone understands that an increase in petrol prices is a blunt instrument — it cuts across food prices. It is just really going to raise the cost of living in the economy and therefore something must be done,” he said.

The government introduced a temporary R1.50/litre relief for April and May with the hope that global energy prices might stabilise and that the two months would create enough of a buffer for local petrol prices to reduce at a more normalised rate.

However, crude has remained stubbornly high – above $120 per barrel – largely thanks to Russia’s ongoing invasion of Ukraine.

The government heavily regulates fuel prices, which include a general fuel levy and Road Accident Fund levy, along with other levies that make up about a third of what consumers pay. An almost 40% reduction in the duty imposed on each litre of fuel helped contain increases in the retail prices of 95-octane gasoline and the wholesale cost of diesel during the two months through 31 May. Time is now almost up, and the government will need to make an announcement before Wednesday (1 June).

The latest data from the Central Energy Fund (CEF) shows an under-recovery (increase) of between R2.42 and R2.31/litre for petrol. This could be compounded by a further R1.50/litre increase as the government’s fuel tax relief comes to an end. Combined, these increases are expected to push the petrol price above R25/litre level.

Read: Brent crude tops $120 a barrel

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