Home South African Motorists under pressure after steep fuel price hike – despite levy relief

Motorists under pressure after steep fuel price hike – despite levy relief


Mineral Resources and Energy Minister Gwede Mantashe announced that the price of 95-octane unleaded petrol would increase by R2.33 a litre.

MOTORISTS and consumers will have to continue digging deeper to pay for food and transportation in the winter months as the fuel price in South Africa rose to yet another record high, despite fuel levy relief being extended for another two months..

Mineral Resources and Energy Minister Gwede Mantashe on Tuesday announced that the price of 95-octane unleaded petrol would increase by R2.33 a litre, while 93-octane unleaded petrol would go up by R2.43/l.

Meanwhile, diesel prices will rise by R1.10 (0.05 percent sulphur) per litre and R1.07 (0.005 percent sulphur) per litre respectively, while illuminating paraffin will increase by R1.56 a litre.

The maximum liquefied petroleum gas (LPG) retail price will fall by 51c per kilogram.

These fuel hikes come at a time when consumers are struggling to keep up with rising costs of everyday goods as inflation across the world has reached multi-year highs on the Russia-Ukraine war.

Mantashe said the main contributing factors were the increasing demand in the northern hemisphere, the EU’s plans to ban Russian oil imports, and the increase of crude oil throughput by refiners.

“The average Brent crude oil price increased from $104.78 to $115.00 (per barrel) during the period under review,” he said.

The June price increase to 95ULP will push the price of this fuel to R24.17/l, and the price of 93ULP to R23.94/l, while the wholesale price of diesel in Gauteng will increase to around R23.06/l.

The Automobile Association (AA) said this would push the cost of consumer inflation even higher than the current 5.9 percent.

“The increases are significant and will hurt all consumers and they will undoubtedly exert inflationary pressure on the economy,” it said.

However, it would have been worse had the government decided not to extend the temporary reduction in the general fuel levy of R1.50 per litre for another two months, to provide limited short-term relief to households from rising fuel prices.

The National Treasury said the R1.50 relief would be extended from June 1 until July 6, followed by a downward adjustment to the relief for the second month to 75 cents per litre from July 7 until August 2.

It said the continuation of the Russia-Ukraine conflict, supply chain bottlenecks and a tightening of global monetary policy had led to even larger increases in fuel prices compared to a few months ago when the temporary fuel levy relief was introduced.

“The withdrawal of the temporary relief in the general fuel levy on March 31, 2022, as per the original announcement, would contribute to an increase in petrol prices of close to R4 per litre, and push prices of 95-octane unleaded petrol (ULP) to above R25 per litre, an increase of just under 20 percent next month,” it said.

The revenue forgone from the extension of the relief was estimated at R4.5 billion.

The government said it would take further measures to help reduce fuel prices in a more sustainable manner, starting by removing the demand side management levy of 10c and decreasing the basic fuel price by 3c per litre in the coming months.

Stanlib chief economist Kevin Lings said that although the extension of the general fuel levy relief was “certainly very helpful”, the petrol price hike would add to hardships for South African households.

“That doesn’t mean that in time we are not going to face a substantial increase because this is just a suspension of the fuel levy, and at some point if the oil price doesn’t come down, if the currency doesn’t strengthen, then we will face this R1.50 a litre,” Lings said.

“It’s not as if it’s going away entirely. It will come back unless the global circumstances change dramatically.”

Global oil prices rose to a two-year high of $124 (R1,932) per barrel on Tuesday after EU leaders reached an agreement to ban 90 percent of Russian crude by the end of 2022.


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