With a massive R3.50 to R4 per litre fuel price increase imminent next week, the Department of Energy and Resources still has nothing to show for its purported review of the pricing methodology for petrol.
WITH a massive R3.50 to R4 per litre fuel price increase imminent next week, which has been labelled a “looming humanitarian catastrophe” by some, the Department of Energy and Resources still has nothing to show for its purported review of the pricing methodology for petrol.
The Motor Industry Staff Association (Misa) has called on Mineral Resources and Energy Minister Gwede Mantashe to put action to his words in urgently reviewing the pricing methodology.
Mantashe and Finance Minister Enoch Godongwana had promised South Africans this will be reviewed “urgently”, even before Russia’s invasion of the Ukraine.
In the meantime, fuel prices have rocketed, making transport not only increasingly unaffordable for many, but also driving up other goods prices – 80 percent of all goods are transported by road.
Misa CEO Martlé Keyter said the union had requested Mantashe since March 22, 2022, in six e-mails, to be included as a stakeholder in the review of the fuel pricing methodology.
“First the ministry did not get our e-mail. Then the union had to wait until someone returned from sick leave. This is unacceptable. Misa wants to be part of the solution because the skyrocketing fuel price will have a devastating impact on the 300,000 employees in the motor retail industry,” said Keyter.
The government has made it clear it’s temporary reduction in the general fuel levy will not be extended after May 31. With the fuel price relief of R1.50 per litre added, motorists could pay up to R3.70 per litre more in June.
Efficient Group economist Dawie Roodt said the high fuel price would result in a sharp rise in inflation, currently at 5.9 percent.
“If inflation rises, the South African Reserve Bank will have no choice but to increase the repo rate. Food prices will soar. It will have a devastating impact on any possibility of economic growth in South Africa,” said Roodt.
The Reserve Bank last week already increased the repo rate by 50 basis points to 4.75 percent per year, with effect from May 20,
Democratic Alliance spokesperson on mineral resources and energy Kevin Mileham said there were many ways to cover the shortfall in revenue from fuel price and VAT relief for the poor.
He said, for example, that a truck operator paid about R2,018 for every 1,000 litres of diesel used towards the bankrupt Road Accident Fund.
If the government simply made third party insurance mandatory for motorists again, the operator could conceivably only have to pay R500 a month for an insurance premium, while freeing up R2.18 per litre for motorists that is currently taxed for the Road Accident Fund,
“Household budgets are being decimated. Any further petrol price hike risks pushing over 30 million South Africans into destitution and hunger. This is a looming humanitarian catastrophe,” said Mileham.
He said he had written to the Speaker of the National Assembly to request a debate on the impact of steeply rising fuel prices on the cost of living and the steps that must be taken to shield the poor, but had received no response. He said he had also written to the government in April on the matter, but also had received no response.
Business Report’s questions to the Department of Mineral Resources and Energy yesterday also were not responded to.
South Africa’s fuel prices are impacted both by international petroleum product and crude oil prices, as well as the rand exchange rate,
Investec chief economist Annabel Bishop said in a note last week that global fuel price pressure continued to build, with the Brent crude oil price at a 12-year high of $109.9 (R1,733) per barrel, despite having come down from March’s high of $119.3 per barrel. She said the price was up 70 percent year-on-year and not expected back at $60 in the foreseeable future. The price was trading at $110.80 per barrel yesterday.
– BUSINESS REPORT