What happened
Finance Minister Enoch Godongwana announced a temporary R3-per-litre cut to the general fuel levy, effective from 1 April to 5 May. The announcement came hours before the steepest monthly fuel price increases in South African history took effect.
Petrol rose R3.06 per litre to R23.25 per litre. Diesel rose R7.51 per litre to a record R26.11. Illuminating paraffin increased by R11.67 per litre.
Why it matters: Approximately two million South African households depend on paraffin for energy. Without the levy cut, fuel increases alone would have added over one percentage point to consumer inflation.
The cost
The levy cut will cost the government approximately R6 billion in foregone tax revenue over the one-month period. The petrol levy dropped from R4.10 to R1.10 per litre. Diesel dropped from R3.93 to R0.93.
International oil prices exceeding $100 per barrel, driven by the Iran conflict, combined with rand depreciation against the dollar to create the price spike.
Reaction
Fedusa called the cut “necessary and overdue” but “not enough,” demanding a full fuel price structure review. AgriSA noted fuel represents 12 to 18% of farming production costs.
Outa criticised the late communication. “Government cannot keep reacting at the last minute while households and businesses carry the uncertainty,” the organisation said.
Economist Maarten Van Doesburgh of CPUT warned the cut will not extend beyond April. “We don’t have the room to extend it. Lost revenue will be paying in the future somehow.”
What happens next
The levy cut expires on 5 May. The next scheduled fuel price adjustment is 6 May. Government indicated further support measures would be announced but gave no specifics. Economists say the R6 billion must be recouped through other tax measures.