Government cuts general fuel levy by R3 hours before steep monthly price hikes

The government will reduce its general fuel levy by R3/lto offset the impact of a steep monthly increase set to kick in from midnight as a result of higher global oil prices, the Treasury said on Tuesday. “The minister of finance proposes that the general fuel levy be temporarily reduced by R3/lfrom Wednesday to Tuesday May 5,” the Treasury and mineral resources department said in a joint statement. “This will reduce the general fuel levy for petrol from R4.10/lto R1.10/land reduce the general fuel levy for diesel from R3.93/lto R0.93/lfor one month.

These amounts exclude other levies such as the Road Accident Fund levy and the carbon fuel levy.” The DA,Cosatu, Business Leadership South Africaand the Fuel Industry Association have all called for the National Treasury to slash fuel levies and provide immediate relief for households bracing for the steepest monthly fuel jump on record. In a separate statement on Tuesday, the mineral resources and energy department said the price of petrol would now rise by R3.06/lfrom April 1, while the wholesale price of diesel would increase by R7.51/l. Illuminating paraffin will cost R11.67/lmore.

Before the intervention on the fuel levy, the latest estimates from the Central Energy Fund showed the retail price of 95-grade unleaded petrol was on track to go up by R5.81/land the wholesale price of diesel by R10.27/l. Finance minister Enoch Godongwana had announced in hisFebruary budget speechthe Treasury would increase fuel levies in line with inflation, with the general fuel levy set to go up by 9c/lfor petrol and 8c/lfor diesel from April 1. At the time, he said the carbon fuel levy would rise by 5c/land 6c/lfor petrol and diesel, respectively, while the Road Accident Fund (RAF) levy would increase by 7c/l.

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The levies are built directly into fuel pump prices, with the general fuel levy going towards the national budget to pay for everything from healthcare and education to policing. The RAF levy, which is R2.25/l, is paid into the fund to compensate victims of road accidents, while the carbon fuel level, presently at about 14c/lfor petrol and 17c/lfor diesel, aims to encourage cleaner energy use by making fossil fuels more expensive. Last week Godongwana told parliament thecabinet had set up a committeeto look into mechanisms to provide temporary relief.

He said he and the minister of mineral and petroleum resources, Gwede Mantashe, would thereafter brief the cabinet on its outcomes and recommendations. In 2022, after Russia invaded Ukraine, fuel prices increased dramatically, andthe Treasury extended reliefthat had been initially planned to be short-term by several months, reducing the general fuel levy and foregoing revenue of about R4.5bn.

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