Government’s extended fuel relief welcome

Government’s announcement that it will extend fuel relief in the form of a reduced General Fuel Levy (GFL) in June and July is welcome and will ease financial pressure on embattled consumers. But, says the Automobile Association (AA), while the relief is being extended, the massive increases to fuel prices for June are still going to hurt consumers and the economy.

In a joint statement released today, the Ministers of Finance and Mineral Resources and Energy announced the extension of the reduction of R1.50 to the GFL for June. In July the GFL will reduce by 75c. The GFL will return to its normal rate of R3.93 in August.

“The joint announcement is a welcome development, and we are sure consumers are grateful that government has stepped in with this financial reprieve. Even so, the adjusted fuel prices still take the fuel price to record highs, and consumers will have no option but to tighten their belts to accommodate for these significant price jumps. Apart from this immediate relief, we acknowledge that government has limited options in dealing with a crisis that is affecting countries around the world, not only South Africa,” notes the AA.

According to the DMRE, the price of 93ULP will increase by R2.43/litre in June, the price of 95ULP will increase by R2.33/l, and the price of diesel will increase by between R1.07/l and R1.10/l. The price of illuminating paraffin will increase by R1.56/l.

The price increase to 95ULP will push the price of this fuel to R24.17/l, and the price of 93ULP to R23.94/l. The wholesale price of diesel in Gauteng will increase to around R23.06/l.

“As government noted, these increases are being driven by the conflict in the Ukraine (and the sanctions against Russia), supply-chain bottlenecks, and a tightening of global monetary policy. The increases are significant and will hurt all consumers and they will undoubtedly exert inflationary pressure on the economy,” notes the Association. 

In addition to the extension of the fuel relief, the AA says it also welcomes government’s plans to implement further measures to help reduce fuel prices in a more sustainable manner.

“The temporary relief is exactly that: temporary, and it’s now apparent that government must find more longer lasting solutions to mitigate against rising fuel costs. Government must now to initiate a review of the fuel price: to examine all the components that comprise a litre of fuel, establish their continued relevance as part of the fuel price, and to determine if the calculations used are still correct. Such a review is long overdue and the longer government delays in getting this started, the longer it will take to find sustainable solutions,” the AA concludes.