South Africa doesn’t have any plans “at the moment” to ease the continued burden of fuel increases on the South African public and any subsidy through the use of the country’s equalisation fund will quickly dry up, Minister of Minerals and Energy Buyelwa Sonjica told an MP.
African Christian Democratic Party (ACDP) MP Henry Cupido asked whether she — in consultation with Minister of Finance Trevor Manuel — will remove “certain levies in order to benefit consumers”. The minister said the options in this regard “are limited”.
In a reply on Tuesday, the minister noted that a fuel tax, a road accident fund levy, a customs and excise levy and an illuminating paraffin tracer-dye levy are paid on petrol and diesel. Changes to the fuel tax and road accident fund levies are at the “sole discretion of the minister of finance”.
The customs and excise levy “can only be amended by agreement between all the members of the Southern African Customs Union”.
A 0,01c per litre (c/l) illuminating paraffin tracer-dye levy is used to pay for the dye used to prevent mixing of illuminating paraffin, “which does not carry fuel levies” with diesel.
However, the minister said that her government is “continually investigating suggestions that could reduce the volatility and magnitude of changes in fuel prices”.
“The challenge is that the only price element that changes on a monthly basis is the basic fuels price [BFP], which changes due to movements in the international crude oil and petroleum product [prices] and the rand/United States dollar exchange rate.
“These movements are out of the control of my department. The other elements of fuel prices, such as transport and levies, are adjusted once a year. The option that has been employed before to ease the burden of fuel-price increases due to increases in the BFP is to subsidise fuel prices.”
However, in order to subsidise the prices of petrol, diesel and illuminating paraffin by 1c/l, it would cost about R18-million per month.
“The current balance in the equalisation fund — a fund earmarked for such purposes — is R660-million. At a subsidy of 10c/l, the subsidisation of fuel prices will last less than four months after which the 10c/l increase will have to be implemented into the final prices again.” — I-Net Bridge