By Lebone Rodah Mosima
Tuesday’s fuel hike announcement triggered warnings on Wednesday from taxi operators, farming groups, motorists, labour and opposition parties that transport and food costs would increase further, even after government cut the general fuel levy by R3 a litre for a month.
The April adjustment increased petrol 93 and 95 by R3.06 a litre, diesel 0.05% sulphur by R7.37 a litre, and diesel 0.005% sulphur by R7.51 a litre.
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Government said the spike reflected higher global oil prices linked to the US-Iran conflict, higher shipping costs and a weaker rand.
Finance Minister Enoch Godongwana and Department of Mineral and Petroleum Resources (DMPR) minister Gwede Mantashe said the general fuel levy would be temporarily reduced from 1 April to 5 May, taking it to R1.10 a litre for petrol and R0.93 for diesel, at an estimated revenue cost of about R6 billion for the month.
They said this would be re-evaluated monthly for the next two months and that additional support for households and key sectors was being prepared.
Pressure for intervention had been building before Tuesday’s announcement.
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Business groups and trade unions last week pressed government to act prior to the announcement. The DA, Cosatu, Business Leadership South Africa and the Fuel Industry Association were among those calling for levy relief ahead of the increase.
SANTACO said on Wednesday that the relief was welcome but insufficient for an industry that runs mainly on diesel.
It said associations nationwide were assessing the hit to operating costs and profit margins and would communicate directly with commuters on any fare adjustments. Increases would be handled “with caution, transparency, and responsibility”, it said.
The DA welcomed the levy reduction but said it was not enough.
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DA finance spokesperson Mark Burke said the bigger problem was an overtaxed public and excessive government spending.
The EFF also said the levy cut was only a partial and temporary concession. The party said fuel costs were being used as a taxation tool and that it would continue its legal challenge to the levy system.
An official MK Party statement posted by its parliamentary caucus called for “immediate fuel price relief and structural energy reform”.
The Automobile Association welcomed the temporary levy reduction and said it would keep lobbying for the relief to be extended.
AA chief executive Bobby Ramagwede told SABC that the issue was government spending. The monthly fiscal cost of the levy cut was manageable compared with the damage higher fuel prices could do to consumers and the economy, he said.
Agriculture groups warned that the fuel shock would feed directly into food prices.
AgriSA and Agbiz said the levy cut was timely and important, but that more would be needed because fuel accounts for about 12% to 18% of production costs in many farming systems.
They said producers were also facing supply constraints and rising fertiliser costs.
They called for more flexible fuel-price reviews, transparency on national fuel stocks, consideration of a temporary RAF levy cut and a full diesel rebate for primary users.
Civil society also said the intervention fell short of what was needed.
The Organisation Undoing Tax Abuse (OUTA) welcomed the levy cut but said it “came too late”.
“South Africans and businesses were left in the dark while the scale of the impending increases became clear well before month-end; in fact, it was already becoming apparent by mid-month. With petrol increases projected at around R5 per litre and up to R10 per litre for diesel, there was enough information available for earlier action,” it said.
“Government cannot keep reacting at the last minute while households and businesses carry the uncertainty,” said OUTA CEO Wayne Duvenage.
“The next fuel price adjustment is due on 6 May. Government has an opportunity to restore some confidence by acting decisively and communicating clearly ahead of time,” he said.