Fuel price hike pressures businesses, consumers

By Yogashen Pillay for IOL

There is going to be significant pain at the pumps for South Africa’s motorists come June 1 as the Central Energy Fund has forecast a R2.27 to R2.36/litre rise in the price of petrol which would push the fuel price close to R25 a litre.

Adding more woes, the general fuel levy reduction of R1.50 announced in March by the government is expected to end on May 31.

DA leader John Steenhuisen yesterday called for the scrapping of the General Fuel Levy, among other measures, including de-regulating the fuel price to mitigate rising fuel costs.

Addressing the media yesterday, Steenhuisen said that to help struggling South Africans with the rising fuel costs, the levy needed to be immediately scrapped.

“The General Fuel Levy accounts for around R 3.93 per litre of fuel. If the government can cut down on wasteful expenditure, the levy can be scrapped.

“The timing of this fuel price increase could not be worse as our citizens are battling a 46% unemployment rate, loadshedding and are still recovering from the recent floods and droughts experienced.”

Steenhuisen added that petrol prices in countries such as eSwatini, Mozambique, Botswana, Tanzania and Kenya were significantly less.

“The petrol price in these countries are on average about R5 cheaper than South Africa. Simply put, their governments don’t tax them as much on fuel prices. We have called for an urgent public debate on the rising fuel costs and we are pleased that the speaker of the national assembly has granted our request. We urgently need to have a national discussion on the fuel price hikes and the measurements government should be taking to prevent these price hikes from taking place.”

Layton Beard of the AA said that it may not be simple to just scrap the levy.

“As much as we would like to support something that would mitigate the rising fuel costs, we have to bear in mind that if this is scrapped, an alternative source of funding will need to be found. It will be difficult for another source to be found as the general fuel levy contributes a large amount to road infrastructure repairs.”

Professor Bonke Dumisa, an independent economic analyst, said the suggestion that the scrapping of the levy was going to be beneficial was misleading.

“The General Fuel Levy is an amount that is not only used for repairs to the road infrastructure across South Africa but also for the Road Accident Fund.“If the General Fuel Levy was scrapped, where would this amount come from for road infrastructure repairs and the fund? Government did try with e-tolls, but unfortunately people were not paying and there is no other alternative source of funding. It is an unfortunate situation. We have to bear in mind that government have done what they could and have been transparent with the fuel price increases,” he said.

Dr Ntokozo Nzimande, a senior economics lecturer at UCT, said that scrapping the levy was something that the government should seriously consider, or at least suspend fuel levies until the Russia-Ukraine situation had calmed.

“With the recent interest rate hike, any increase in fuel costs will bring even more misery to South Africans. Inflation will surely rise, necessitating another massive interest rate hike.

“If the government doesn’t do something to alleviate the rising cost of living, the frustrations will build up and eventually lead to protests and looting. Government has to act fast.”

Speaking at a post-Cabinet meeting media briefing, Mondli Gungubele, Minister in the Presidency, said that on the matter of fuel they took guidance from the ministers of finance and energy.“We are happy that we were able to protect motorists with the General Fuel Levy reduction recently for a period. What is the next step? We will have to take guidance from the minister of Finance on what measures can possibly be put in place so that we can stay afloat in that matter.”

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