In response to a parliamentary Q&A submitted by MK Party’s Thalente Thuthukani Sakhile Kubheka, the Minister of Mineral and Petroleum Resources, Gwede Mantashe, revealed that his department took several steps to lower the cost of fuel in the country in recent years, with more to come soon.
Last year, the department removed a 15% premium from the freight rate, which is the cost of shipping fuel to South Africa from international suppliers.
At the time of its removal, the premium amounted to a welcome 10c/litre reduction in prices at the pumps.
Additionally, the Department of Mineral and Petroleum Resources repealed the Demand Side Management Levy (DSML) on Petrol 95 in June 2022.
The DSML was implemented into the price structure of Petrol 95 in January 2006 when the fuel was first introduced to the inland market.
Most vehicles in the inland region did not require 95 unleaded to perform at their best and the unnecessary use thereof thus resulted in “octane waste” with negative economic consequences, with the DSML intended to curb the demand for the specific propellant.
Like the 15% premium on freight rates, the removal of the DSML permanently slashed a further 10c/litre from the price of Petrol 95.
Compounding these savings, there have been no increases to the country’s General Fuel Levy or Road Accident Fund Levy since 2021 due to the nation experiencing record-high fuel prices over this period.
Over the last financial year alone, these levy pauses spared motorists a collective R4 billion.
More to come
In his response to Kubheka’s queries, Mantashe indicated that consumers can expect more relief in the near future following the appointment of a Ministerial Task Team whose only goal is to “review the fuel pricing formulae holistically.”
During the formal opening of Parliament in July 2024, President Cyril Ramaphosa said that the new Government of National Unity (GNU) would undertake a comprehensive review of the current fuel price calculation to determine areas in which the burden on motorists can be reduced.
A month later, Minister of Finance Enoch Godongwana announced that an official Fuel Price Intervention Plan would soon be tabled in Cabinet.
The finer details of the document have yet to be revealed, though previous suggestions included a revision of industry margins, the introduction of a price cap on petrol 93, deregulating petrol prices, removing guidance on diesel prices, bi-weekly price changes instead of once a month, and a review of how inland transport costs are determined.
Experts believe that it is highly unlikely that the GNU would reduce the levels of taxes and levies imposed on fuel, as it is one of the Treasury’s largest and easiest revenue generators.
Compromising on these levies could see government trying to recoup its losses elsewhere, which may include higher VAT or personal income taxation.
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