Cape Town - The General Fuel Tax pay holiday is over, which means already-stretched motorists and consumers are in for a record price increase, prompting calls for the government to soften the blow by means of another fuel relief.
But Finance Minister Enoch Godongwana and Mineral Resources and Energy Minister Gwede Mantashe are yet to make an announcement on the new price set to come into effect on Wednesday.
They had in March tabled the temporary reduction in the general fuel levy by R1.50 a litre from April 6 until Tuesday.
Mantashe had also proposed additional measures to be introduced after the expiry of the temporary measures from June 1, including a reduction in the Basic Fuel Price of 3c/l, the termination of the Demand Side Management Levy of 10c/l on 95 unleaded petrol sold inland, as well as an introduction of a price cap on 93 octane petrol.
Over the weekend, the National Treasury and Department of Energy met to discuss the possibility of further relief.
Bureau for Economic Research economist Tracey-Lee Solomon said: “According to the oil price exchange rate, there’s a R2.42 under-recovery increase. In addition to that there’s also the fuel levy relief that will be back, we were given a R1.50 relief and that is set to return.
“They were meeting over the weekend in terms of a decision if they would offer any more relief in June.
“Currently the oil price is trading at 120 dollars a barrel, the rand is quite weak, so if the government does not give relief we’ll be close to a R4 petrol increase.
“It mostly revolves around the Russia-Ukraine war – Russia is the third biggest crude oil supplier and its production is decreasing while other countries are substituting away from Russian oil.
“It is important to note that the Organisation of the Petroleum Exporting Countries is not rapidly increasing its oil production so there is less oil to move around.”
AA spokesperson Layton Beard said that while the price was going up with certainty, the question remained: By how much?
“The impact will be massive because fuel is an input cost. For example, in agriculture the machinery needs fuel, to deliver goods you need fuel, mining needs petrol for machines, manufacturing, it is a massive input cost and fuel also needs to be transported across the country.
“If, for example, a 50c is added to everything you buy, your salary isn’t increased, you pay more to get from point A to point B, all of a sudden a R10 000 doesn’t go as far as it used to.”
The organisation is not only calling for a cut in all levies but for a review of the fuel price.
“We are saying, let’s break down every litre specific amount of money that is split in 21 different elements like general fuel levy, retail margin, wholesale storage margin etc, and determine whether all these elements are necessary or relevant for South Africa and calculated correctly.”
He said that there would also be a direct impact on the poor in terms of the price of illuminating paraffin used for heating, cooking and lighting.
The Motor Industry Staff Association (Misa), also wants Mantashe to review the pricing methodology for petrol.
Martlé Keyter, Misa’s chief executive officer: operations, said the union has requested to be included as a stakeholder in the review of the fuel pricing methodology.
“Misa represents 54 000 members in the retail motor industry who are dependent on motor vehicle and component sales, vehicle services and repair work. Misa wants to be part of the solution because the rocketing fuel price will have a devastating impact on the 300 000 employees in the motor retail industry,” said Keyter.
Fighting Inequality Alliance SA national coordinator Wafaa Abdurahman said the effects of the increase would be devastating, especially for the unemployed.
“The petrol price affects everything that the working class have to use in their everyday lives, from food to a taxi to go to work. With the Russia-Ukraine war everything already went up, increasing petrol prices are only going to make things worse. People who are working are already suffering, what about the unemployed, how are they going to survive?”
Activist Abraham Agulhas added: “Government is getting a lot of taxes from the fuel, they are in a position to pass regulations to mitigate an increase. They always say they don’t have money but they refuse to tax the rich by introducing a wealth tax, if there is more money coming in, they can restructure the budget accordingly, but they continue putting the burden on the poor, that is the problem. The poor need to receive a basic income grant so people can survive these harsh economic conditions.”
The DA said it would hold demonstrations across the country against the pending fuel price hike.
Cape Times