Petrol industry association warns of steep fuel hikes unless government extends levy reprieve

A steep fuel price increase next month awaits consumers, the South African Petroleum Industry Association (Sapia) said on Monday.

Ahead of the announcement this week from the mineral resources and energy department on the fuel price adjustment for June, Sapia said it was not aware of a possible extension of the government’s temporary reprieve on South Africa’s contentious fuel tax levy, warning that  future price increases were likely. 

Sapia’s head of strategic projects and economic regulations, Kevin Baart, said it was “very difficult” to estimate by how much prices could rise, but added that the government was bound to adjust the price in line with global prices, because to try to keep prices down was economically unsustainable.

Petrol currently costs R21.84 a litre, while the price of diesel is R21.99.

In a temporary reprieve for consumers, the general fuel levy included in the basic fuel price was reduced by R1.50 a litre from 6 April to 31 May. In the absence of an extension, the levy will be reinstated when the June adjustment kicks in.

“What was communicated to us is that the tax exemption was for two months,” said Sapia’s executive director, Avhapfani Tshifularo. “So we’re all waiting to hear what the government’s latest stance is, because we had discussions but the official version is that there will be no extension and that the R1.50 is going to be reinstated.”

South African fuel prices have skyrocketed in line with global oil prices as a result of Russia’s war in Ukraine. 

Anathi Madubela is an Adamela Trust business reporter at the M&G.