The National Treasury has taken the first step to lift South Africa’s petrol price which could allow retailers to compete on price and offer special offers. The Sunday Times wrote that this could mean discounts for motorists at their preferred station.

In a recent interview, finance minister Enoch Godongwana said that full deregulation can only happen once the National Treasury figures out how they could get back the R90 billion they would lose if the fuel taxes were removed all at once.

“We are taking the fuel levy completely out, but it cannot be done in one financial year – that would throw the fiscal framework off by R90 billion.”

Godongwana said the government is already considering possible ways to make up for this shortfall, including by raising taxes on motor license renewal fees to fund The Road Accident Fund, which relies on a fuel levy.

Once removing fuel tax, other administered prices, and subsidies come into effect, it will make it attractive for all fuel companies and drastically lower the price consumers pay.

Wayne Duvenage, the Outa chief executive, said that petrol stations will be able to publish prices on a screen placed outside of the station. The radical changes also mean that companies such as Pick n Pay could enter the market

“This won’t be cheap considering the retailers’ margins. They don’t have much to play with and we don’t want a few mega-stores manipulating the prices by hiking them up unfairly.

However, the deregulation will create a little bit of competition,” he said.

April Change

The government will also step in to help soften the effect of South Africa’s record high petrol price this April, says Godongwana.

Addressing parliament on Thursday 31 March, Godongwana said they’ll be reducing the GFL fuel levy by 1.5 Rand per liter between 16 April to 31 May 2022.

These changes will be reflected in the cost of diesel and fuel as follows:

  • A reduction in the GFL in petrol from R3.85/litre to R2.35/litre
  • A reduction in the GFL in diesel from R3.70/litre to R2.20/litre

South Africa has been hit hard by an oil price surge recently. Records high petrol and diesel prices have been caused by higher global oil prices, coming as a result of Russian invasion of Ukraine.

Motorists have already seen a significant increase to the price of petrol in March, and there is a high chance they will be faced with further increases in April.

The latest data from the Central Energy Fund shows prices are expected to increase by between 118.8 – 121.2 cents/litre this month, prior to government intervention.

The price of diesel is expected to increase by R2.97 – R3.12/litre before the intervention.

Information by Businesstech

Fuel Zone