Government dipped into the equalisation fund to lop 8c off the petrol price increase.

Government dipped into the equalisation fund to lop 8c off the petrol price increase.

On Wednesday morning the Department of Energy and Mineral Affairs announced that the price of all grades of petrol and diesel would be restricted to 30c a litre increases as from June 2. The diesel increase would have been about 30c a litre without the intervention.

The equalisation fund was re-instituted by Mlambo-Ngcuka in 2003 and has accumulated more than R650 million since then, the reported. The official announcement followed a statement by minerals and energy affairs minister Phumzile Mlambo-Ngcuka on Tuesday.

Mlambo-Ngcuka said the minerals and energy and finance departments would continue to monitor fuel price changes "and evaluate what further relief is possible should high fuel price increases continue".

Nhlanhla Gumede, acting deputy director-general of hydrocarbons and energy planning, confirmed that the treasury was considering "other mechanisms in case the high prices last for longer than a few months".

However, he would not elaborate except to say the use of strategic fuel reserves to purchase crude oil when the prices were low was not a viable option. He said South Africa was much too small to effect any change in product prices in that way.