South Africa takes new steps to curb rising fuel prices

PUBLISHED: Wed, 01 Jun 2022 08:20:44 GMT
Bhargav Acharya
A person uses a petrol pump, as the price of petrol rises, in Lisbon, Portugal, March 7, 2022. REUTERS/Pedro Nunes

May 31 (Reuters) – South Africa’s government on Tuesday outlined new measures to curb steeply rising domestic fuel prices, easing pressure on consumers as previous relief measures were due to expire.

Since the Ukraine war and its knock-on effects sent oil prices soaring, governments around the world have been considering subsidies to soften the financial strain on their populations. Read full story

The new steps by South Africa include the extension of a 1.5 rand per litre cut in the general fuel levy that was originally announced in March until early July, to be replaced by a 75 cent per litre reduction from early July until early August.

The cost of extending the fuel levy reduction is estimated at 4.5 billion rand ($288 million) in foregone revenue, the National Treasury said in a statement with the Department of Mineral Resources and Energy, adding it remained committed to the 2022 fiscal framework.

From June the energy department will also remove a demand side management levy of 10 cents per litre applied to 95 grade petrol and is proposing that the basic fuel price be decreased by 3 cents per litre in the coming months.

Read more: South Africa govt cuts sharply rising fuel prices by a sliver

Even with the new measures, it said in a separate statement that the petrol pump price would increase by up to 243 cents a litre from June and the diesel price by up to 110 cents.

South Africa’s fuel prices are adjusted on a monthly basis due to factors including the strength of the rand currency and global oil prices.

In recent months rising prices have caused public alarm and prompted calls from opposition parties for the government to intervene more decisively. They have also helped push inflation close to the upper limit of the central bank’s target range. Read full story

Earlier this month the central bank unveiled its biggest rate hike in more than six years, citing fuel prices among risks to the inflation outlook. Read full story

($1 = 15.6088 rand)

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