The government is in the early stages of discussions that could lead to a review of the fuel price to assist households and businesses battling rising costs, according to mineral and petroleum resources minister Gwede Mantashe.
While South Africa has enjoyed some relief at the pumps of late, an underperforming rand is expected to undermine the depth of fuel price cuts in November while heightening tensions in the Middle East, and Eskom’s tariff hike application to the energy regulator threaten hopes of further relief.
Speaking at Africa Oil Week in Cape Town, Mantashe said despite the sustained geopolitical tensions and their threat to global energy security, energy markets improved, leading to the decrease of basic fuel prices for five months.
“To make life more affordable for all South Africans, we have already begun with discussions about reducing administered prices, including the price of fuel and electricity. Included in the discussions of fuel prices, are discussions on, but not limited to, the general fuel and the Road Accident Fund levies,” he said.
“We intend to conclude these discussions in the shortest possible time for the country to realise the three priorities of the government of national unity — to drive inclusive economic growth and job creation; reduce poverty and tackle the high cost of living; as well as to build a capable, ethical and developmental state.”
Mantashe said he and colleagues in cabinet were in discussions about how to reduce the fuel price to take into account its impact on the cost of living. He is also engaging the National Treasury to assess the impact the Fuel Levy, which funds the Road Accident Fund and general road improvements, has on the price of fuel. “RAF and fuel levy distort the fuel price in a big way,” he said.
“As we sit here today, the price of petrol, in actual fact, is R14 per litre. But we are paying R20 (plus) a litre. R6 is for RAF and the fuel levy. Our view is that unless we see and influence that distinction, we are not going to see the actual impact of fuel price increases and decreases, that prices have been decreasing for the past five months and the impact is not visible because there is RAF and fuel levy attached to the fuel price.”
The RAF said while it was aware of the discussions, it would not comment on Mantashe’s remarks. By Friday, Treasury had not responded as it’s in a closed period ahead of the medium-term budget policy statement later this month.
National Treasury underwent a two-phase intervention with the department of mineral resources and energy in 2022 which included a temporary reduction in the general fuel levy through a sale of a portion of the strategic crude oil reserves, a reduction in the basic fuel price of 3c per litre, the termination of the demand side management levy, and a price cap on 93 octane petrol.
Meanwhile, Transnet Pipelines announced interventions aimed at keeping South Africa from going over the gas cliff. CEO Sibongiseni Khathi said the entity was developing a new oil pipeline between Durban and Johannesburg to be concluded by 2027. “One [big project] is an accumulation facility which will be at the Durban Island View.
“That project is part of the bigger project that we had embarked on of upgrading the Durban to Johannesburg pipeline where we installed a 24-inch pipeline. The project was initially designed to have two accumulation facilities — one in Durban and one in Jameson Park. So, the Jameson Park one was completed, the trunk line was completed. So, what is outstanding is the leg at Island View, which we are doing.”
Khathi said a new jet fuel pipeline will also run from Heidelberg into OR Tambo was being developed to upgrade the network system.
Mantashe said to ensure South Africa had an adequate supply of liquid fuels, the government concluded a transaction — through the Central Energy Fund — on the sale of assets at the SAPREF Precinct.
