The government has agreed to temporarily slash the general fuel levy, limiting the extent of increases in the price of petrol and diesel this month, but the cost of paraffin will double, a blow for millions of poor South Africans who need it for cooking, heating and lighting.
Effectively, paraffin will now cost R24.21/l in the economic hub of Gauteng, overtaking the price of 95-grade unleaded petrol, which is now R23.36. The government has traditionally kept the price of paraffin much lower than petrol and diesel as low-income households rely heavily on the commodity.
After intense lobbying from unions, business and political parties, the Treasury and mineral & petroleum resources department said the general fuel level will be reduced by R3/l from April 1 to May 5, a move estimated to cost about R6bn in foregone tax revenue for the period.
“The relief measure is designed to be fiscally neutral and the government will implement mechanisms to recoup the foregone revenue within the fiscal framework approved during the 2026 budget,” they said in a joint statement.
“In reaching this decision, the minister of finance sought to balance the socio-economic impact on the country and welfare impact on South African consumers, specifically regarding food and transport inflation, with the fiscal objectives announced in the February budget.”
The other levies built into the pump price of fuel — including the Road Accident Fund levy and the carbon fuel levy — will remain intact.
The DA, Cosatu, Business Leadership South Africa and the Fuel Industry Association had called on the Treasury to slash fuel levies as it became increasingly clear that households faced the steepest monthly fuel jump yet due to the Middle East conflict, which has created bottlenecks in global oil supply.
Read: EDITORIAL | Fuel levy cut eases pressure but leaves poorest households in the dark
Before the intervention on the fuel levy, the latest estimates from the Central Energy Fund showed the retail price of 95-grade unleaded petrol was on course to jump by R5.81/l from midnight on Tuesday while the wholesale price of diesel was due to be R10.27 higher. The price of paraffin was set to jump R11.63.
With the levy reduction, petrol will now cost R3.06 more, while the wholesale price of diesel is now R7.51 higher. But paraffin will cost R11.67 more, making it now more expensive than petrol not just in Gauteng, but in coastal areas too.
Trade union Uasa welcomed the temporary fuel levy relief but is concerned that households reliant on paraffin face a big increase.
“Uasa reminds the government that many households, particularly those with low incomes, depend on paraffin for cooking, heating and other needs. These households also require relief measures to address the rising cost of living,” spokesperson Abigail Moyo said in a statement.
Cosatu said workers and the economy still cannot afford the new prices.
“Diesel is critical for the public transport that workers depend on, as is paraffin for millions of working-class families,” it said.
‘Drowning in debt’
“Workers already drowning in debt, supporting up to seven relatives each and spending an average of 40% of their meagre wages on transport will not manage such painful diesel and paraffin, and even petrol, price hikes.”
Finance minister Enoch Godongwana announced in his February budget speech that the Treasury would increase fuel levies in line with inflation, with the general fuel levy — which goes towards the national budget to pay for services such as healthcare, education and policing — set to go up by 9c/l for petrol and 8c/l for diesel from April 1.
At the time, he said the carbon fuel levy would rise by 5c/l and 6c/l for petrol and diesel, respectively, while the Road Accident Fund (RAF) levy would increase 7c/l.
The RAF levy, which is paid into the fund to compensate victims of road accidents, will stay at R2.25/l, while the carbon fuel levy, which aims to encourage cleaner energy use by making fossil fuels more expensive, remains at about 14c/l for petrol and 17c/l for diesel.
Last week, Godongwana told parliament the cabinet had set up a committee to consider mechanisms to provide temporary relief. He said he and mineral & petroleum resources minister Gwede Mantashe would thereafter brief the cabinet on its outcomes and recommendations.
In 2022, after Russia invaded Ukraine, fuel prices increased dramatically, and the Treasury extended relief that had been initially planned to be short term by several months, reducing the general fuel levy and forgoing revenue of about R4.5bn.
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