South African motorists may be in line for some relief next month, with the government considering further measures to protect consumers from rising fuel prices.
This is according to the Department of Mineral and Petroleum Resources (DMPR) Deputy Director General Tseliso Maqubela, who said there is still a chance that further relief measures will be announced.
Shortly before April’s fuel price adjustment announcement, Finance Minister Enoch Godongwana announced that the General Fuel Levy (GFL) would be heavily reduced for April.
While this was a welcome relief for most, some believe the government could have done more to protect South African citizens.
For the time being, motorists are staring down another fuel price hike from 5 May, with the Central Energy Fund’s latest data pointing towards a potential R3 per litre increase for petrol, and R9 per litre for diesel.
The Congress of South African Trade Unions (Cosatu) has declared this as another blow that the economy, which is limping along at 1% growth, cannot sustain.
“Government’s one-month R3 a litre fuel levy cut is a positive first step, but much more relief is urgently needed,” the union noted.
“Whilst appreciating this effort to cushion society from the international oil price spike, we fear that workers and the economy will not cope with further massive petrol, diesel and paraffin hikes.”
In an interview with Kaya Biz, Maqubela explained that it is crucial to understand how petrol prices are calculated when unpacking the current crisis.
He noted that the department looks at the world’s major refining centres and the prices they sell refined products for, whereafter fuel adjustments are determined.
This leaves South Africa’s fuel prices vulnerable to changes in the global fuel industry and the rand-dollar exchange rate, and all this before additional costs are added.
These additional costs include government levies, the Road Accident Fund (RAF) levy, import and freight costs, as well as wholesalers’ and retailers’ profit margins.
Further relief sought
Maqubela said that despite the criticism the system has received, it “has served us well” for nearly twenty years, effectively ensuring both security of supply and competitive pricing.
He explained that one of the major factors influencing the current local fuel landscape is South Africa’s reliance on refined fuel imports, which make up between 60% and 70% of finished products.
These imports originate from Gulf nations, including Oman, Kuwait, the UAE and Saudi Arabia.
Given South Africa’s daily consumption of between 65 and 67 million litres daily, concerns were raised about potential supply disruptions, which Maqubela dismissed.
“We are not concerned about the availability of supply. Our concern remains the price,” he said.
Maqubela explained that discussions around additional fuel price relief are still ongoing and that “there is work that is being done, and at the right time, there will be announcements made.”
“This announcement could come around the third week of April or so. However, I wouldn’t want to preempt the outcome of those discussions,” he added.
Maqubela noted that it is too early to predict May’s fuel prices, as daily under-recoveries fluctuate due to global events.
Cosatu said that it welcomes Finance Minister Enoch Godongwana’s commitment to put further relief in place to protect South Africans and the local economy from disaster.
“The most important source of relief for workers, society and the economy is to further reduce the fuel levy and taxes,” urged the union.
“This is the most impactful and cost-effective solution to this global crisis.”
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