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South Africans face fuel price surge as levy concession ends


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South Africans face fuel price surge as levy concession ends

A petrol pump
Photo by Bloomberg

26th May 2022

By: Bloomberg


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South Africans face record high gasoline prices in June as a subsidy to help motorists counter the impact of high crude costs exacerbated by Russia’s invasion of Ukraine comes to an end.

With a weighting of almost 5% in South Africa’s inflation basket, the expected jump in pump costs is likely to push the gauge above the central bank’s target range and spur price hikes across the economy. The government reduced the levy on fuel by 40% in April and May, helping to keep a lid on prices.


“We understand that it’s because of the war between Ukraine and Russia, but we are going to also have to increase taxi fares and customers are going to start fighting us because we have been increasing prices for people who aren’t getting anything from their jobs,” said Dumisani Vilakazi, a minibus-taxi driver in Johannesburg.

Absa Group economists estimated in a research note that gasoline prices could jump “by a staggering 16% month-on-month” should the R1.50 a liter reduction in the fuel levy not be extended. Latest Central Energy Fund data show an average under-recovery on gasoline of about R2.40 a per liter in May, pointing to an increase for that fuel of about 10%, before adding in the full levy.


Mondli Gungubele, a Minister in the Presidency, referred questions at a post-Cabinet meeting on Thursday on whether the levy waiver will be extended to the National Treasury.

The government adjusts pump prices on the first Wednesday of each month after taking into account changes in oil prices, the currency, taxes and retailers’ regulated margins. The price of 95-octane gasoline in Johannesburg, the commercial hub, is currently R21.84 a liter.

“The current petrol price is already making us cry and now it’s about to increase again,” Michael Gumbi, an Uber driver, said. “If things keep going like this I’m afraid we’ll end up having to take back our cars.”


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