Johannesburg: Finance Minister Enoch Godongwana has announced a temporary R3 per litre reduction in the fuel levy, a measure intended to cushion South Africans from the economic impact of rising global oil prices. The move comes as South Africans brace for steep fuel price hikes, set to take effect tomorrow.
According to South African Government News Agency, the R3 per litre reduction in the fuel levy is designed to alleviate the impact of severe fuel price increases. Speaking at the South Africa Investment Conference (SAIC), Godongwana highlighted the government's close monitoring of tensions in the Middle East and their impact on global oil markets, which threaten to drive up local fuel prices significantly.
Godongwana explained that the government had considered various models before deciding on a temporary reduction in the general fuel levy as the most viable option within the current fiscal environment. This intervention will take effect on 1 April and last for one month, softening the expected fuel price increase, which was projected to exceed R5 per litre for petrol and rise even higher for diesel.
Despite the relief, motorists will still experience an increase, with petrol prices set to rise by R3.06 a litre and diesel by between R7.37 and R7.51 per litre. Godongwana stressed that while the relief ensures a less severe impact, the intervention is only set for April, with further assessments to be conducted for May and June. The current measure is expected to cost the country approximately R6 billion in foregone revenue.
The Minister expressed concern over diesel prices due to their broader economic impact, noting that changes in diesel prices affect various sectors such as food, fertiliser, and transport. An interdepartmental team is exploring additional interventions to mitigate these effects.
Godongwana cautioned that the government's ability to sustain such relief measures is limited, indicating that any continued relief would likely not exceed three months, depending on global developments. The Minister emphasized that South Africa is not alone in facing these pressures, with countries worldwide grappling with rising energy costs linked to geopolitical instability.
Addressing concerns about a potential recession, Godongwana stated that it was premature to raise alarm, although inflation is expected to rise moderately by around 1.2 percentage points. The government assured that the relief is part of a broader, phased response aimed at balancing consumer protection with fiscal sustainability, with further support measures anticipated in the coming months.