Government ponders cutting fuel levies and taxes to battle incoming price hikes

Government is said to be working on creative ways to battle incoming fuel price hikes, such as decreasing fuel levies and the rationing of fuel to the public.

The Automobile Association (AA) warned of crippling fuel prices, which are predicted to soar even higher in April.

According to data published by the Central Energy Fund (CEF) on Tuesday, projections point to an over recovery of between 35 and 36 cents in the price of petrol and 37 cents for illuminating paraffin..

Ways to help alleviate high prices

Minerals and Energy Minister Gwede Mantashe said there are various ways to help alleviate the high fuel prices.

The Minerals and Energy Department is now looking at decreasing the fuel levy and other taxes give motorists some reprieve.

The general fuel levy currently stands at R3.85 per litre for petrol and R3.70 per litre for diesel while the Road Accident Fund (RAF) levy is currently at R2.18 per litre for petrol and diesel.

Mantashe during a portfolio briefing in Parliament on Tuesday said he is talking to Finance Minister Enoch Godongwana about the reduction on taxes on fuel.

“Taxes constitute 36% of the price at the pump. Would it work if it was suspended for a period? What would the impact be on the fiscus? Is it possible to remove the 10c per litre demand-side management levy on unleaded 95 or place a price cap on unleaded 93? Is it possible to avail part of the strategic stocks to local refiners? These discussions are under way.”

Meanwhile, the Energy Department said South Africans may need to ration their fuel as a result of Russia’s war in Ukraine.

It said fuel prices globally and indeed nationally have reached unsustainable levels while in South Africa’s fuel prices has reached record levels.

‘No country is going to be spared’

“This is a global issue and no country is going to be spared. Developing Economies will suffer more than developed countries, economies will struggle to support any form of growths. Increases in excess of than R2 per litre must be expected in this period.”

The Energy Department also proposed other interventions measures for South Africans to save fuel

“Energy saving measures must be implemented voluntarily during the period of this major geopolitical event – Working from home where tools of trade allow should be brought back, enforcement of speed limits must be increased to maximize on the fuel saving, restrictions on how many litres each motorist is allowed per visit will be considered if the situation deteriorates.”

It said consideration should also be given to provide relief to public transport and food production.

The Energy Department emphasised that South Africa is part of the Global Energy Supply Chain and therefore cannot escape being affected by the international conflict and that that the country would need to explore and find its own oil reserves if it wanted to mitigate rising fuel costs in the long term.

The International Energy Agency also cut its world oil demand forecast for 2022 on Wednesday, warning that sanctions against Russia over its invasion of Ukraine could spark a global supply “shock”.

“Faced with what could turn into the biggest supply crisis in decades, global energy markets are at a crossroads,” the IEA said in a monthly report, warning that “the implications of a potential loss of Russian oil exports to global markets cannot be understated.”

Additional reporting by AFP.

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