Fuel tax relief rollback threatens June petrol price relief
While diesel will come down in June, petrol is set to rise once again.
Image: Tumi Pakkies / Independent Newspapers
After two months of relentless price hikes, June appeared poised to offer some much-needed relief for fuel prices. While diesel is expected to see a significant drop, the gradual phase-out of Treasury's fuel tax relief measures suggests that petrol prices are likely to rise.
According to late-month data from the Central Energy Fund, petrol prices could theoretically decrease by 25 cents for 93 unleaded and 21 cents for 95 unleaded at the start of June.
A far more significant over-recovery has developed for diesel, with the same data set pointing to decreases of between R4.60 for 50ppm and R5.29 for 500ppm.
However, the government has indicated that the fuel tax reprieve, announced at the beginning of April, will be halved from June 3 before being phased out at the beginning of July. This means an additional R1.50 needs to be worked into the petrol price and R1.96 into diesel.
With this factored in, South Africans are facing a petrol price increase of around R1.25, while the diesel decrease could be limited to between R2.64 for 50ppm and R3.33 for 500ppm. This follows sharp increases implemented in May and April.
June's predicted adjustment could see 95 unleaded petrol reaching all-time highs of R27.01 at the coast, surpassing the previous July 2022 high of R26.90, while Gauteng residents will now pay in the region of R27.88. The wholesale price of 500ppm diesel is likely to fall to R27.84 in Gauteng.
However, the Slate Levy, which added R1.22 to May's fuel price, could add a further variable to June's official fuel price, which will be announced early next week. This levy compensates fuel companies for price fluctuations in the previous month.
Another interesting development, which could bring relief in the longer term, is that South Africa’s Minister of Mineral and Petroleum Resources, Gwede Mantashe, is pushing for the establishment of a new state-owned company to tackle rising fuel prices.
During his budget vote speech last Tuesday, Mantashe said that South Africa would need a long-term solution to fuel price shocks, as well as a deeper look at its over-reliance on imports.