The cabinet will convene on Wednesday with the escalating Middle East conflict and its knock-on effect on domestic fuel prices firmly on the agenda, according to people familiar with the matter.
A committee comprising trade, industry & competition minister Parks Tau, electricity & energy minister Kgosientsho Ramokgopa, mineral & petroleum resources minister Gwede Mantashe and finance minister Enoch Godongwana is expected to present proposed relief measures to the government of national unity (GNU) at an ordinary meeting on Wednesday.
The briefing will focus on how the government plans to shield South Africans from a looming surge in the cost of living brought on by the increase in fuel prices and fertiliser costs. The increases have economic implications as fuel and fertiliser are used in sectors including agriculture, freight, mining and logistics, meaning a large adjustment feeds through directly to the cost of goods and services.
Tau confirmed during a media briefing on the sidelines of the South Africa Investment Conference on Tuesday that the cabinet committees have been meeting in preparation for the cabinet meeting.
As part of the government’s efforts to cushion the country from the fuel price hike, the Treasury announced a month-long suspension of the fuel levy, which is expected to wipe R6bn off the expected tax revenue.
“The mineral & petroleum resources minister will continue to review fuel pricing over the medium term. Work is under way on a broader package of measures to support households and key sectors of the economy. Further details on additional support measures will be announced in due course,” the Treasury said in a statement.
Should the fuel levy relief go beyond May, it could shave off R15bn in tax revenue, Godogwana said.
Other government interventions may not be fiscal in nature, Godongwana said the government is yet to work out from where lost revenue will be recovered.
Political parties and labour unions have welcomed the fuel levy relief but have warned that more work is needed.
“We understand that for many South Africans, the over R7 increase in diesel and R2 increase in petrol prices will seriously damage budgets and affect business decisions. The DA looks forward to more details as to how this fuel levy relief will be funded. We cannot afford to take on more national debt,” DA MP Mark Burke said.
Cosatu said: “Whilst appreciating this effort to cushion society from the international oil price spike, we fear that workers, society and the economy will simply not cope with a R3/l hike for petrol and more worryingly a devastating R7/l hike hike for diesel and R11 for paraffin. Diesel is critical for the public transport that workers depend upon as is paraffin for millions of working-class families.
“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.”
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