Finance Minister, Enoch Godongwana announced on Thursday, 31 March that the general fuel levy will be cut by R1.50 per litre from Wednesday next week to 31 May 2022.
According to Godongwana indicated that this will now reduce the levy for petrol from R3.85 per litre to R2.35 per litre. The levy on diesel will be reduced from R3.70 per litre to R2.20 per litre.
“The intention of the temporary reduction of the general fuel levy is to support phasing in the fuel price increases that we are expecting in the short term. This will go some way in assisting South Africans to adjust to the new reality,” Godongwana said.
Petrol prices have increased by more than 30% over the past year due to surging oil prices and according to the latest data from the Central Energy Fund, 95 octane petrol was set to increase next week Wednesday by R1.81/litre, 93 octane by R1.73/l, diesel by R2.97/l and R3.12/l, reports News 24.
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However, with the temporary cut to the general fuel levy, petrol prices will rise by only around 23c to 31c.
Godongwana went on to say that the proposed reduction of the general fuel levy will be funded by the liquidation of a portion of the strategic crude oil reserves.
“In this instance, the revenue foregone by the reduction in the levies will be recouped through a sale of strategic crude oil reserves, which are held by the Strategic Fuel Fund, which is a subsidiary of the Central Energy Fund. The sale would be required to raise around R6 billion,” Godongwana added.
Meanwhile, the escalation in oil prices is also due to the global economic recovery as COVID restrictions are eased, and the current conflict between Russia and Ukraine has placed significant pressure on domestic fuel prices and other commodities.
Traders are also scrambling to secure oil supplies as Russia, is unable to deliver some of its oils due to shipping and banking restrictions
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