The rand’s strength and lower oil prices could lead to a fourth consecutive month of fuel price cuts in SA despite the fuel levy hike announced by finance minister Enoch Godongwana.
In the latest iteration of his 2025 budget speech on Wednesday, Godongwana announced the general fuel levy (GFL) would be increased 16c/l for petrol and 15c for diesel when the next monthly fuel price adjustment is made on June 4.
Godongwana described the adjustment — the first in three years — as the sole new tax proposal for the 2025/26 fiscal year, citing inflationary pressures as the reason for the hike. The increases to the general fuel levy (GFL) would help fill the gap from his rejected VAT hike proposal and ease the main budget deficit, which now stands at 4.5% of GDP.
The budget overview said the GFL had remained unchanged for the past three years to provide consumers with relief from high fuel price inflation.
The levy hike in June will come after motorists enjoyed the third consecutive month of fuel price decreases at the beginning of May with a 22c/l decrease to the retail prices of 93 and 95 unleaded petrol, a 41c/l drop in the wholesale price of 0.005% low-sulphur diesel and a 42c/l drop for 0.05% high-sulphur diesel.
Even with the increased levy, however, fuel prices may drop in June. Ahead of Godongwana’s announcement, the latest data from the Central Energy Fund (CEF) showed that wholesale diesel prices could fall by up to 50c/l while petrol could decrease by up to 23c/l.
This was because the rand had strengthened against the dollar, making it cheaper to import fuel, while international oil prices had dropped. Over the past 30 days the rand improved from R18.60 to R17.95 to the dollar, while the price of Brent Crude oil decreased from $67.44 a barrel to $64.55.
However, the global energy market and exchange rates are volatile and the trends could be reversed by June 4.
Commenting on Godongwana’s budget speech, the AA warned that fuel levy increases would have far-reaching consequences for consumers and the economy.
It said the levy adjustment came as South Africans were already contending with high food prices, elevated interest rates, increased electricity tariffs and persistently high unemployment.
“Fuel is a critical input cost across all sectors of the economy; any increase inevitably drives up transport and operational costs, further intensifying inflation,” it said.
The association said that lower-income households, which spent a greater share of their income on transport, would be disproportionately affected by this rise.
“With the new adjustments in June, the combined cost of the GFL and the Road Accident Fund (RAF) Levy will exceed R6 per litre in some areas — accounting for more than 30% of the total pump price before adding the base fuel cost, distribution margins, and retail markups.
“While the AA recognises the need to address fiscal pressures, continuously turning to fuel levies to fill budget gaps is unsustainable — especially in the absence of transparency on how these funds are allocated and used.”
The AA renewed its call for a comprehensive review of SA’s fuel pricing model. It said this should include a forensic audit of revenue generated from the GFL and RAF Levy, full transparency on the fuel price-setting formula published by the department of mineral and petroleum resources. It should include engagement with civil society, labour, and the transport sector to identify fair and sustainable revenue models, and explore alternative funding mechanisms that reduce reliance on fuel-based taxation.
“Although the latest increase may appear modest in isolation, it forms part of a broader trend where motorists and transport-reliant industries bear the brunt of fiscal policy changes. SA must have a broader conversation about funding infrastructure, road safety, and public transport in a way that doesn’t unduly burden citizens,” the AA said.
The Road Freight Association (RFA) also criticised the fuel levy increase, saying transporters could not absorb increases without detrimental effects on their business sustainability.
“This means that the Treasury is ‘finding’ R4bn towards the R75bn shortfall from the previous iteration of the budget; however, this underscores that the Treasury would rather tax citizens than cut the wasteful expenditure that has brought the country to where it is,” said Gavin Kelly, CEO of the RFA.
“The cost of logistics — 85% of which runs by road freight — will become more expensive. The consumer will pay more, transport through SA will become more expensive, global supply chains will re-evaluate their routes and you and I will dig deeper into our pockets for goods and services, and transport to work while the government has ‘found’ a way to fund its salary and wage increases as well as all the other vanity programmes it runs,” he said.
Current fuel prices are:
Inland:
Petrol 95 unleaded: R21.40/l
Petrol 93 unleaded: R21.29/l
Diesel 0.05%: R18.90/l
Diesel 0.005%: R18.94/l
Coast:
Petrol 95 unleaded: R20.61/l
Petrol 93 unleaded: R20.50/l
Diesel 0.05%: R18.11/l
Diesel 0.005%: R18.18/l.
droppad@arena.africa
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