AA calls on minister not to increase general fuel and Road Accident Fund levies
By SIPHELELE DLUDLA
THE Automobile Association of SA on Friday appealed to Finance Minister Enoch Godongwana not to increase general fuel and Road Accident Fund (RAF) levies in the 2022 Budget he is set to deliver this week.
The call comes as the latest data points to big fuel price hikes next month -well above R1 a litre for all grades- that will push petrol prices to a record high of more than R21 a litre.
The AA has urged the finance minister to provide relief to consumers already reeling under economic hardship, with the next petrol price increases expected to pile further financial pressure on cash-snapped households.
Fuel price data released on Friday by the Central Energy Fund forecast increases that will lead to record high fuel prices in March.
The data showed an increase of R1.25 a litre for 95 octane petrol, R1.24 a litre for 93 octane, R1.29 a litre for diesel, and an increase of R1.22 a litre for illuminating paraffin.
Price cuts of 68 cents for both petrol and diesel were implemented in January, but this reprieve was temporary as prices went up by 53 cents in February, underpinned by the heightened global oil price.
On an annual basis, fuel inflation remained high at 32.2%, and the price of petrol rose above R20 a litre inland.
The AA said that given the current outlook, 95 octane petrol in Gauteng would cost around R21.39/l and 93 octane petrol R21.13/l.
The AA said the coastal price of 95 octane would also breach the R20/l mark for the first time, rising to R20.67/l based on the current data.
It said diesel and illuminating paraffin could also increase to levels never before seen, rising by R1.22/l to reach R13.19/l off its current price of R11.97/l.
AA spokesperson Layton Beard said an analysis of the movement in fuel prices so far in February showed international petroleum prices were contributing entirely to the expected increases, with the stronger rand buffering what would have been more significant increases.
“The rand is currently trading in a more positive band than it has for some weeks, with the local currency shaving around 17 cents off oil’s negative movement,“ he said.
“Without this, the expected increases could have been between R1.40/l and R1.47/1 for fuels across the board.”
In December, Godongwana called for changes to the way the fuel price is calculated, after the price of petrol rose to a record R2.09 rand a litre in Gauteng.
Energy Minister Gwede Mantashe also told Parliament that separating the fuel levy from prices would be “helpful”.
The general fuel levy is currently pegged at R3.93 a litre, up from R3.77 in 2021, and the RAF levy at R2.18 a litre, up from R2.07 in 2021.
Combined, these levies add R6.11 to every litre of petrol and diesel sold in the country.
Neighbouring countries that buy fuel directly from South Africa, however, do not add these taxes to their fuel pricing, making their fuels cheaper than it is in this country which supplies them.
According to the Council for Scientific and Industrial Research, almost 60 percent of households in Johannesburg and Pretoria spent more than 10% of their income on public transport in 2019/20.
He said this left precious little for basic necessities such as food, electricity and water, let alone the odd luxury.
”Add to this the radical 20% electricity increase called for by Eskom, the latest interest rate hike, and the volatility of the rand – all of which will inevitably lead to yet another rise in food prices – and it‘s clear that consumers are being pushed to the brink of a sheer cliff, ” he said.
Although the expected increases are significant, Efficient Group chief economist Dawie Roodt notes they are in line with current economic data.
”We are concerned about these expected increases, which will undoubtedly put more pressure on consumers. ”These hefty increases also reaffirm our belief that a review of the fuel price is necessary to establish if there are any components within the current pricing model that can be revised.”
Adding to this call for greater transparency in the fuel price, Neil Roets, chief executive of Debt Rescue, earlier this month said that consumers deserved to know how the latest fuel price hike was calculated.