South Africans have been dealt a number of hard blows over the past months with the cost of fuel having steadily risen by 30% over the past year to its current inland price of R21,60 per litre of 95 Octane.
Government has stepped in to curtail the rising cost of fuel by selling roughly R6 billion of the state’s strategic oil reserves, the funds being channelled to offset the general fuel levy which will be lowered by R1,50 per litre from Wednesday 6th of April until the 31st of May 2022, as announced on Thursday by Finance Minister Enoch Godongwana.
What the sale of strategic oil reserves means is that this move will not impact government debt. Additionally, government has planned the following changes in fuel price from the 1st of June:
- A 3c per litre reduction in the basic fuel price.
- The scrapping of The Demand Side Management Levy (DSML) of 10c per litre on 95 unleaded petrol sold inland.
- A price cap is to be introduced on 93 octane petrol, which will allow retailers to sell below the regulated prices.
- Greater competition to be promoted through Government stopping the publishing of guidance on diesel prices.
- The reviewing of the Regulatory Accounting System (including the retail margin, wholesale margin and secondary storage and distribution margins) to assess whether adjustments can be made to lower the margins over the medium term.
Prior to this announcement, the Central Energy Fund reports that 95 octane petrol was set to increase by R1,81/litre, 93 octane is expected to climb by R1,73/l, diesel by between R2,97/l and R3,12/l on Wednesday next week. Due to the abovementioned changes, however, fuel prices will rise by only around 23c to 31c.
Godongwana said in Parliament on Thursday that, “The intention of the temporary reduction of the general fuel levy is to support a phasing in the fuel price increases that we are expecting in the short term. This will go some way in assisting South Africans to adjust to the new reality.”
