With motorists reeling from a series of fuel-price hikes in 2022, September is expected to bring some relief for the second month in a row.
However, civil action organisation Outa is worried the savings won't be passed on to motorists but instead hijacked to fund freeways in place of the failed e-toll project.
According to latest data by the Central Energy Fund, a stronger rand and lower international petroleum costs point to a possible R2.56/l reduction in the retail price of 95 unleaded petrol, a R2.40 reduction for 93 unleaded, and a drop of up to R2.17 in the wholesale price of diesel in September.
This follows a price cut of R1.32/l for both grades of petrol at the beginning of August, while the wholesale price of high-sulphur diesel (0.05%) decreased 88c and low-sulphur diesel (0.005%) by 91c. Illuminating paraffin fell R1.44/l .
The decreases took place despite the reimposition of the full R1.50/l fuel levy at the beginning of August, after the government introduced a two-month R1.50 reduction in the petrol and diesel levy in April and May, which was adjusted to 75c/l in June and July.
Fuel prices are adjusted on the first Wednesday of every month and the department of mineral resources and energy said July’s cuts had been made possible by decreases in international prices of fuel. The price of Brent crude is about $100 a barrel after peaking at $123 earlier in 2022. The rand has also strengthened to about R16.30 to the dollar after hitting more than R17 in July.
It has been an expensive year for motorists, with fuel prices reaching record levels in July after a series of hikes, and the expected price cuts will help ease their financial burden.
Outa welcomed September’s expected fuel price cuts but was concerned that finance minister Enoch Godongwana may seize the opportunity to increase the fuel levy by 25c to 30c per litre, to raise additional revenue to cover the Gauteng freeway improvement bonds, which e-tolls have failed to do.
“Recently, minister of transport Fikile Mbalula indicated that an announcement on the e-toll decision is expected to coincide with the minister of finance’s medium-term budget policy statement, due in October,” Outa CEO Wayne Duvenage said.
There have been strong hints that Godongwana will increase the fuel levy, to offset the scrapping of e-tolls.
“Should this happen, Outa will denounce this decision on the basis that the fuel levy has already been increased in excess of R2.50/l since the Gauteng freeway upgrade began in 2008. The government failed to take up Outa’s suggestion of a ring-fenced 10c/l increase to the fuel levy some 11 years ago, which would have settled the freeway bonds by today.”
The government has made extremely poor decisions in the past, not only about the various fuel levies and taxes, but also about the road financing options available to it, Duvenage said.
“Short-term financial gains lead to long-term negative ramifications for taxpayers. By increasing the fuel levy by 25c/l, an additional R5.5bn will flow into the Treasury’s coffers each year. Compare this to a correctly priced Gauteng freeway upgrade, which ought not to have cost the state more than R500m a year to finance this capital investment over 20 years.
He said the government made desperate financing decisions based on short-term external factors, only to see the negative ramifications play out in the long term. A classic example of this happened when the petrol price dropped from slightly over R14/l in mid-2014 to R10.31/l about eight months, and the government made increases to both the general fuel levy and the Road Accident Fund levy of 30c/l (14%) and 50c/l (48%) respectively.
“This decision alone added roughly R17bn to Treasury’s coffers each year, and permanently added 80c/l to the price of fuel,” he said.
Mineral resources and energy minister Gwede Mantashe also gazetted a notice on July 22 proposing a price cap on 93 octane petrol, which would allow fuel retailers to discount prices, allowing motorists to shop around for the best deal as they do for diesel. The retail price of petrol is set by the government and it is illegal at any other price.
The public was given 30 days to comment on the notice.
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