South Africa’s Finance Minister Enoch Godongwana is weighing a reduction in the fuel levy to cushion consumers from surging fuel prices driven by the ongoing Iran conflict, according to a senior government official.
Godongwana is expected to announce his decision on Tuesday ahead of monthly fuel price adjustments set to take effect on Wednesday, the official said, speaking on condition of anonymity due to the sensitivity of the matter.
Trade unions, business groups, and political parties have called on the government to act as global energy prices spike following the US-Israeli war involving Iran, pushing up local fuel costs.
Officials say the government is considering measures similar to 2022, when it temporarily cut the fuel levy after the outbreak of Russia’s war in Ukraine. That reduction, which lowered prices by 1.5 rand per litre, remained in place for several months before being phased out.
South Africa’s central bank has warned that rising fuel prices pose inflation risks, projecting fuel inflation could exceed 18% in the second quarter.
Meanwhile, the rand has weakened more than 6% against the dollar since the Middle East conflict began, further increasing pressure on fuel prices.
As a country heavily reliant on imported petroleum, South Africa remains vulnerable to global oil price fluctuations. Fuel prices are adjusted monthly based on global crude oil prices, exchange rates, and domestic taxes, with changes implemented on the first Wednesday of each month.
Goodness Anunobi
