Reduced fuel levy to be funded by sale of strategic crude oil reserves, says finance minister Enoch Godongwana
Finance minister Enoch Godongwana on Thursday said the proposed reduction in the general fuel levy for two months is intended to support a phasing in of the expected fuel price increases in the short term.
“This will go some way in assisting South Africans to adjust to the new reality,” he told parliament.
Godongwana proposed a temporary reduction in the general fuel levy by R1.50/l from April 6 to May 31.
The proposal will be included in the 2022 Rates and Monetary Amount and Amendment of Revenue Laws Bill.
“This will reduce the levy for petrol from R3.85/ to R2.35/l. The levy on diesel will be reduced from R3.70/l to R2.20/l.
“These amounts exclude other levies such as the Road Accident Fund levy and the carbon fuel levy.
“The revenue will be recouped through a sale of strategic crude oil reserves held by the Strategic Fuel Fund, which is a subsidiary of the Central Energy Fund. The sale would be required to raise about R6bn,” Godongwana said.
We are doing all of these things in line with our overall commitment to keeping money in the pockets of South Africans during these trying times, while at the same time restoring the health of our public financesEnoch Godongwana, finance minister
Tabling the budget last month, the minister announced there would be no increase in the general fuel levy and the RAF levy for the 2022/2023 fiscal year.
“Our aim was to protect in particular poor households who spend the majority of their income on food and transport against record-high increases in fuel prices.”
The price of crude oil has increased sharply since Russia's invasion of Ukraine and this has had a direct affect on fuel prices in SA.
Though the reduction in the levy will be temporary, a broader package of relief measures will be explored and will come into effect after May 31.
Mineral resources and energy minister Gwede Mantashe had proposed a package of measures to be introduced on June 1.
These include a reduction in the basic fuel price of 3c/l and the introduction of a price cap on 93 octane petrol. The latter measure means retailers can sell below the regulated prices.
“We are doing all of these things in line with our overall commitment to keeping money in the pockets of South Africans during these trying times while restoring the health of our public finances,” Godongwana said.
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