The government is under pressure to provide temporary fuel levy relief to South Africans.
The DA, Cosatu, Business Leadership South Africa and the Fuel Industry Association have all called for the National Treasury to slash fuel levies and provide immediate relief for households bracing for the steepest monthly fuel jump yet in April.
It is a positive signal that the cabinet has set up a committee to look into mechanisms to provide temporary relief. It is hoped the National Treasury is close to finding money to subsidise relief for the working and middle class, who have long spent too much on transport costs in the absence of a proper public transport system in South Africa.
Our government cannot afford to bury its head in the sand as increasing calls come in to cushion consumers from the worst of the devastating impact.
The Treasury has previously said its hands are tied since South Africa imports its fuel. Yesterday, when asked to respond to the DA proposal, all the department would tell Business Day was that “there have not been any announcements in this regard”.
The standard approach must change in the face of an impending catastrophe.
The reality is that the majority of South Africans cannot afford the sharp hike that’s now just days away. Not the private motorists who will have to fork out nearly R6 more per litre of petrol, and certainly not the millions of commuters who use public transport and will feel the increase in their minibus taxi fares, as well as the higher prices on grocery shelves.
Transport costs already eat up a large chunk — at least 40% — of the salaries of millions of workers forced to commute many kilometres daily to their places of work. That percentage will be even higher if the April fuel increase takes effect because wages will stay the same.
Energy economist Lungile Mashele recently laid out — while stressing she did not wish to be alarmist — how things could quickly go pear-shaped if the government does not act swiftly. She said the looming fuel price leap would be a “structural shock on a scale South Africa has never seen before”, and it is difficult to argue with that.
Transport costs already eat up a large chunk — at least 40% — of the salaries of millions of workers forced to commute many kilometres daily to their places of work.
The DA says it is willing to work with finance minister Enoch Godongwana on cutting both the general fuel levy, currently R4.10 per litre for petrol, and the R2.25 per litre Road Accident Fund levy.
Yes, slashing these levies would take away a large chunk of the billions of rand the Treasury needs to fund public spending. But the government cannot afford to fold its hands and allow a fuel price surge that will severely hurt the economy.
In 2022, after the Russia-Ukraine war similarly sent fuel prices sky-high, the Treasury extended relief that had been initially planned to be short term by several months, reducing the general fuel levy and foregoing revenue of about R4.5bn. It can be done.
In the long term, South Africa needs to pay serious attention to its refining capacity.
It boggles the mind that a country that once boasted six refineries is now down to just two, about halving the country’s refining capacity over the past decade.
These are down to just the National Petroleum Refiners of South Africa and Astron Energy, in addition to the Sasol Secunda coal-to-liquids plant. Astron, however, is currently undergoing a planned maintenance shutdown, further exposing us to the vagaries of the turmoil in global oil markets.
The department of mineral & petroleum resources says it remains optimistic that the tensions will de-escalate “in the near future” and stabilise markets and fuel prices.
What South Africans need is not what is probably misplaced optimism but rather concrete measures to protect them against the imminent carnage in household finances.
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