South Africa’s recent drop in fuel prices has been effectively offset by the government’s first fuel-levy increase in four years, following a court decision to allow the levy hike to proceed. The move is similar to Ghana’s decision to increase its Energy Sector Levy Act by 80 pesewas.
On Tuesday, the Central Energy Fund and the Department of Mineral Resources and Energy announced that both 93- and 95-octane petrol prices in Gauteng, South Africa’s economic hub, will decrease by just 0.05 rand per litre starting Wednesday. Diesel prices will also see a drop of 0.369 rand per litre.
This marginal decrease comes in the wake of a High Court ruling that dismissed an urgent application filed by the opposition Economic Freedom Fighters (EFF) seeking to halt the government’s plan to raise fuel levies.
Finance Minister Enoch Godongwana had announced on May 21 that the levy on petrol would rise by 0.16 rand per litre and by 0.15 rand on diesel, as part of Treasury’s efforts to raise revenue after Parliament blocked proposals to increase value-added tax (VAT).
The increases mean that levies and taxes now account for approximately 30% of the total retail price of gasoline in South Africa. This is particularly significant given that fuel directly contributes 3.8% to the national inflation basket, influencing the cost of public transport and goods movement across the country.
Despite the levy hike, broader economic indicators suggest easing inflationary pressure. Last week, the South African Reserve Bank revised its inflation forecasts downward through 2027, citing stronger exchange rate assumptions and declining global oil prices as factors that will help cushion the impact of higher domestic fuel levies.
The country has now recorded four consecutive months of fuel price reductions, although the latest levy increases are expected to moderate the relief felt by consumers at the pump.
