Petrol price changes coming for South Africa: Ramaphosa
President Cyril Ramaphosa has announced that the Government of National Unity (GNU) has committed to tackling the rising cost of living for South Africans – which will include adding more essential items to the basket of goods exempt from VAT and reviewing the petrol price formula.
Delivering his address at the formal opening of Parliament on Thursday (18 July), Ramaphosa outlined the main strategies for the next five years, operating as a GNU comprising 10 minority parties.
Acknowledging the differences between the parties, Ramaphosa said that the GNU, in all its disparate views, have agreed to a minimum set of goals and targets that will unite them in their actions.
This has resulted in a development plan that will be executed over the next five years, which will include clear goals and measurable targets that every department will aim towards, regardless of the ministers in charge.
“It is about putting the people of South Africa first and foremost,” Ramaphosa said.
The president said that the GNU has put three main goals at the core of its strategy:
- Drive inclusive growth and job creation
- Reduce poverty and tackle the high cost of living
- Build a capable and ethical developmental state
He said that continuing to focus on inclusive growth—including broad-based black economic empowerment—and restoring the country’s municipalities was key to this strategy.
The GNU will also focus on and accelerate public-private partnerships, looking for rapid development and construction. This would include the long-promised broadband fibre, the president said.
A key announcement to come from the address was the GNU’s plans to tackle the high cost of living.
“An effective integrated and comprehensive strategy is necessary to price protection and support to the most vulnerable in society,” Ramahosa said.
“Even at a time when many companies are making large profits, millions of South Africans are suffering as a result of rising prices – of everything that they buy.”
Ramaphosa said the GNU would look to expand the basket of essential food items exempt from VAT and undertake a “comprehensive review of administered prices, including the fuel price formula”.
“This we did for a while, as prices of fuel kept rising, we found a way we could stabilise the price. We will seek to find ways to address this challenge,” he said.
Several interventions have been raised in the past to address petrol prices in South Africa. Back in 2022 the government proposed three changes that could impact pricing. These include:
- The possible introduction of a price cap;
- A proposal to stop publishing guidance on diesel prices;
- A process to review the Regulatory Accounting System (RAS).
These proposals were put forward as South Africa and the world were dealing with the fallout of the Russian invasion of Ukraine. The time period also saw direct intervention from Treasury to provide temporary relief amid successive hikes.
Treasury previously said that a review of the RAS 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.
Similarly, while Treasury has previously proposed a fuel price cap, it warned that it will require ‘significant investigations’ before officially being introduced.
The introduction of a petrol price cap was suggested for 93 unleaded petrol, which would require retailers to sell fuel below the regulated prices.
Removing the guidance on diesel prices, meanwhile, would promote competition among retailers.
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