Godongwana announces temporary reduction in fuel levy

The war between Russia and Ukraine has caused the price of brent crude oil to skyrocket - leading to a spike in the price of fuel.

Godongwana made the announcement in the National Assembly on Thursday amid growing calls for government to increase support for cash-strapped consumers. 

He proposed that the general fuel levy be temporarily reduced by R1.50 per litre from Wednesday 6 April to Tuesday 31 May.

This will reduce the general fuel levy for petrol from R3.85 per litre to R2.35 per litre while the general fuel levy for diesel will reduce from R3.70 per litre to R2.20 per litre.

Godongwana said the temporary reduction will be funded by liquidation of a portion of strategic crude oil reserves.

"These amounts exclude other levies such as the Road Accident Fund levy and the Carbon Fuel levy. It is estimated that the partial reduction in the fuel levy will cost around R6 billion in foregone tax revenue for the two-month period.

“The combined effect of the two proposals will not have an impact on the fiscal framework adopted by Parliament following the 2022 Budget," added Godongwana.

He said additional interventions will be proposed to be introduced after the temporary measures expire.

"This include a reduction in the basic fuel price of 3c/l, in line with the recommendations of the review done by the Department of Mineral Resources and Energy. The termination of the Demand Side Management levy of 10c/l on 95 unleaded petrol sold inland. The introduction of a price cap on 93 octane petrol, following from the previous DMRE proposal and consultation. This will allow retailers to sell at a price below the regulated price.”

ALSO READ