South Africa’s motorists can breathe a sigh of relief as the temporary reduction in the general fuel levy (GFL) has been extended for the coming months.
The relief has been in place since 31 March, when the Minister of Finance and the Minister of Mineral and Petroleum Resources jointly announced a temporary R3 reduction in the general fuel levy.
This was done to provide limited short-term relief to households from rising fuel prices following the Middle East conflict.
According to the departments, the measure was designed to be fiscally neutral, with the government implementing mechanisms to recoup the foregone revenue within the fiscal framework approved during the most recent budget.
“Since this announcement, the continuation of the Middle East conflict has resulted in consistent pressure on global oil prices, which has led to increases in domestic fuel prices,” they said.
In hopes of providing further relief and addressing higher inflation concerns and the negative impacts on South Africa’s economic growth due to increasing fuel prices, extended and expanded relief measures have been proposed moving forward.
Finance Minister Enoch Godongwana proposed that the R3-per-litre reduction in the general fuel levy for petrol be extended until Tuesday, 2 June.
Beyond this, the minister also proposed that the temporary relief for diesel increase by 93 cents to R3.93 per litre, effectively reducing the diesel levy to zero from Wednesday, 6 May, to Tuesday, 2 June.
Godongwana proposed that the level of relief be halved from June, phasing out the relief before July.
As a result, relief from the general fuel levy will be reduced to R1.50 per litre for petrol and R1.96 per litre for diesel, effective from Wednesday, 3 June, to Tuesday, 30 June.
This means the general fuel levy will increase from R1.10 per litre to R2.60 per litre for petrol, and increase from R0.00 per litre to R1.97 per litre for diesel in June.
The government’s relief measures will end in July, when the general fuel levy returns to R4.10 per litre for petrol and R3.93 per litre for diesel.
Recuperating billions in foregone tax revenue
According to the Treasury, the estimated cost of relief for April to June 2026 is R17.2 billion in foregone tax revenue.
Despite this loss in revenue, the government’s fuel levy relief measure was designed to be revenue-neutral and will be recuperated through a combination of higher-than-expected tax revenue and underspending.
Thus, measures are not expected to have an impact on the fiscal framework adopted by Parliament following this year’s budget.
The Department of Mineral and Petroleum Resources (DMPR) also announced that it has initiated a review of the formula, which will see a change in how fuel prices are regulated moving forward.
Finally, the department noted that, according to the Self-Adjusting Slate mechanism, the under-recovery of importers of petroleum products must also be accommodated.
As a result, the Slate levy on petrol and diesel will also be adjusted for May.
Petrol and diesel prices are set to rise next week, with an announcement by the DMPR expected soon, but for the time being, the extension of the fuel levy relief is welcome news for South Africa’s motorists.
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