Two-month fuel price relief is widely welcomed
THE relief in the fuel price has been welcomed as a much-needed step to help hard-hit consumers keep their heads above water.
The government last week announced a reduction in the basic fuel levy by R1.50 for two months, while pursuing a more permanent and sustainable restructuring measure of the fuel price.
The R1.50 adjustment should reduce the general levy for petrol from R3.85 a litre to R2.35 a litre, and reduce the levy on diesel from R3.70 a litre to R2.20 a litre, until the end of May.
Spokesperson for trade union Uasa, Abigail Moyo, on Friday said they were pleased with the government’s fuel price intervention and welcomed the possibility of added interventions once the two-month period has lapsed.
“The temporary decrease of R1.50 per litre in the general fuel levy should bring some relief to workers burdened by rising fuel costs,” Moyo said.
“As the Russia/Ukraine conflict drags on the international price of crude oil is expected to increase, with a knock-on effect on the local oil price.”
The fuel price adjustment comes amid another expected record petrol price hike in April, as global oil prices remain elevated.
The latest data forecasts a petrol price increase of between R1.80 and R1.93 in April, while diesel is expected to go up by between R3 and R3.14 a litre.
FNB Agri-Business senior agricultural economist Paul Makube said the temporary relief at the pump and looming changes to the fuel price determination boded well for agriculture.
“The fuel price reduction will benefit farmers as we head into increased activity in the agriculture calendar, with the onset of the winter crop plantings and the harvesting of the summer grains and oilseeds, which will consume a lot of fuel,” Makube said.
Rising global oil prices have resulted in high food and fuel inflation in South Africa, with the cost of the average household food basket increasing by R354.52 to R4355.70 in February, from R4 001.17 a year ago.
Agri SA said the measures to provide short-term relief by reducing the general fuel levy would also contain food prices.
“This is a necessary intervention to buttress the agricultural sector and consumers against the impact of rising fuel prices on the cost of food,” said Agri SA chief economist Kulani Siweya.
“It is essential that the government be amenable to the expansion of these interventions, depending on the conditions prevailing in the global fuel market at the end of the two-month period.”
It is estimated that the partial reduction in the fuel levy will cost around R6 billion in foregone tax revenue, but is set to be recouped through the sale of strategic crude oil reserves.
The government is also mulling the introduction of a price cap on 93 octane petrol to allow fuel retailers to sell at a price below the regulated price.
PicknPay founder Raymond Ackerman lauded the step towards the petrol price deregulation, after being a crusader for the policy for more than 50 years.
“We were not allowed to cut petrol or the price of many other essential items, such as bread. We even tried to offer our customers a discount for fuel if they bought food from us, but this was stopped too.
“Eventually, the government threatened to arrest me if I sold petrol at a discount,” Ackerman said.
“By cutting the price of petrol, you give real relief to customers who are taking enormous strain. There’s no good reason why petrol can’t be discounted, just like any other commodity,” he said.