Cabinet insisted on Thursday that Energy Minister Jeff Radebe’s intervention to hold fuel prices steady in September – rather than to allow for the August under-recovery to be passed on to motorists as usual – would have no impact on the fiscus.
In a statement released following its Wednesday meeting, Cabinet said that the country’s national finances were protected from the intervention, as it made use of funds that were already in the fuel-pricing structure.
No further details were provided, but Engineering News Online understands that the slate levy mechanism will be used to fund the intervention. The slate levy is a levy paid by motorists to recover money owed to the oil companies, owing to the time delay in the adjustment of the petrol pump price.
In the absence of the intervention, the petrol price would have increased by a further 32c/l on September 5. Instead, the price rose by only 4.9c/l to accommodate an increase in the retail margin of petrol to cater for the annual salary increases of employees, such as petrol attendants, at fuel stations.
Cabinet welcomed the unchanged fuel price, which it said would offer “once-off temporary relief for users of public transport, motorists and consumers, while other measures are being sought by the Department of Energy”.
Cabinet also expressed concern about the detrimental effects that fuel-price increases had had during 2018 on consumers, as well as the inflationary impact of the hikes on producers, which were being passed to the retail sector.
During the course of 2017, motorists have been confronted with several large fuel hikes, which precipitated campaigns by the Democratic Alliance and the Organisation Undoing Tax Abuse for a reduction in the fuel levy.
The inland petrol price rose to a record R16.03 a litre in August from R11.24 in January, while coastal prices increased to R15.44 a litre, from R10.83 at the start of the year. Likewise, diesel prices in Gauteng surged from R10.28 a litre in January to a peak of R14.44 in July, before moderating slightly in August.
“Taking this into account, the Minister of Energy, Mr Jeff Radebe, made a special intervention on behalf of government to cushion the public against yet another steep increase in the fuel price,” the Cabinet statement read.
“At a time when the economy is being impacted by global headwinds, Cabinet is pleased that this intervention has no impact on the fiscus as it uses funds that are already in the fuel-pricing structure,” it added.