Jason Woosey|Published
South Africans got a much-needed dose of relief from Treasury this week, with Finance Minister Enoch Godongwana announcing fuel relief measures that are set to kick in from November 4.
During his Medium-Term Budget Policy Statement tabled in Parliament on Wednesday, Godongwana announced that the General Fuel Levy would be temporarily cut.
This effectively means a tax reprieve of R3 for diesel and R1.50 for petrol, from November 4 until December 1, decreasing to R1.50 for diesel and R1 for petrol until January 5.
But how will this affect prices at the pump?
Given the volatility in international oil prices, with recent days seeing a spike, it is difficult to accurately predict November’s fuel price adjustments. However, the latest data from the Central Energy Fund is showing a rosier outlook compared to earlier in the month.
While the latest CEF report still shows accumulated under-recoveries of between R1.37 and R1.46 for petrol, a small over-recovery has emerged in recent days. If this trend continues, the increase is likely to fall below the R1 per litre mark, meaning a fuel price decrease of 50 cents or more once the fuel tax reprieve has been factored in.
Diesel prices are also looking more positive. Current projections point to a possible increase of around R1.25 per litre, although this could rise slightly by month-end if international prices remain at current levels. Even so, diesel motorists could still see a price cut of R1.50 or more per litre.
If the above projections materialise, petrol prices in November are likely to range between R28.88 and R29.75 per litre, while diesel should cost between R29.58 and R31.30 per litre at wholesale level, depending on the grade and location.
While the reprieve should help to ease spiralling transport costs, which rose above 10% year-on-year in the most recent Consumer Price Index (CPI), the long-term fuel price outlook remains dire, and if the Middle East conflict is not resolved by year-end, South Africans could once again face record fuel prices in January.
A tank still costs hundreds more
Following October’s steep price increases, a litre of 95 Unleaded petrol currently costs R29.38 at the coast and R30.25 in Gauteng. That’s a good R8.80 more than it cost a year ago. That means a 40-litre tank now costs you around R350 more than it did a year ago.
Diesel is also at record levels, with the wholesale price of 500ppm currently listed at R31.08 at the coast and R31.95 inland, with 50ppm at R31.93 and R32.80 respectively. Retail prices, depending on the outlet, are likely to range between R33 and R35.
Even with a R1.50 reprieve in November, South Africans will still be paying more than R30 at the pumps for diesel.
In the space of a year, the price of 500ppm has risen by R12.57. A 70-litre refuel now costs R880 more.
Calls for lasting improvements
The National Automobile Dealers’ Association (NADA) welcomed the temporary fuel tax reprieve, but said the measures must translate into lasting improvements in household affordability.
“Fuel costs affect household budgets, business expenses and the affordability of mobility. The temporary levy reductions will provide some breathing space for motorists and businesses that depend on vehicles for their livelihoods,” said NADA chairperson Brandon Cohen.
Cohen said the measures acknowledge the pressure that transport costs place on the wider economy, including commuters who are dependent on public transport and businesses that transport goods and provide services.
“Affordability extends well beyond the purchase price of a vehicle. Consumers must accommodate finance repayments, fuel, insurance and maintenance alongside other household expenses. Fuel levy relief helps with one component of that cost, but sustained improvements require stronger household incomes, employment growth and lower pressure on everyday expenses,” Cohen added.
The South African National Taxi Council (SANTACO) welcomed the announcement of temporary fuel relief and said it was a welcome step towards easing the financial pressure currently experienced by the transport sector. The council also assured commuters that there would be no immediate fuel-related fare increases while the industry continues to engage the government in pursuit of more sustainable, long-term relief measures.
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