Feature by Staff Writer – BUSINESSTECH
The government will intervene to soften South Africa’s record-high petrol price in April, says finance minister Enoch Godongwana.
Addressing parliament on Thursday (31 March), Godongwana said this would be done by temporarily reducing the general fuel levy (GFL) included in the Basic Fuel Price by R1.50/litre for the period between 16 April to 31 May 2022.
These changes will be reflected in the cost of diesel and fuel as follows:
• A reduction in the GFL in diesel from R3.70/litre to R2.20/litre
Godongwana said that these changes would be formally introduced in the 2022 Rates and Monetary Amount and Amendment of Revenue Laws Bill which will be confirmed by parliament, with no changes made to other fuel levies such as the Road Accident Fund tax.
A broad number of interventions will also be considered once the two-month period lapses, including a review of the basic fuel price, the minister said.
- A reduction in the Basic Fuel Price of 3c/l, in line with the recommendations of the review done by the Department of Mineral Resources and Energy (DMRE).
- The termination of the Demand Side Management Levy (DSML) of 10c/l on 95 unleaded petrol sold inland.
- The introduction of a price cap on 93 octane petrol, following from the previous DMRE proposal and consultation. This will allow retailers to sell at a price below the regulated price.
- The termination of the practice to publish guidance by the DMRE on diesel prices to promote greater competition.
- The Regulatory Accounting System (including the retail margin, wholesale margin and secondary storage and distribution margins) will be reviewed to assess whether adjustments can be made to lower the margins over the medium term. Interventions will be considered by the DMRE to reduce the price pressure for illuminating paraffin over the medium term.
He added that Treasury has already committed to helping citizens by announcing no increases to the general fuel levy or the Road Accident Fund fuel levy in its 2022 budget.
Godongwana said the intervention will have no impact on the fiscal framework with the money taken from the current reserves.
South Africa has been hit by a record high petrol and diesel price after Russia’s invasion of Ukraine caused global oil prices to skyrocket.
Motorists already paid R1.46/litre more for petrol this month, with the risk of a similar increase in April.
The latest data from the Central Energy Fund shows the petrol price was expected to increase by between R1.73 – R1.81/litre in April prior to the government’s intervention. The price of diesel is expected to increase by R2.97 – R3.12/litre before the intervention.