Fuel levy pain: Brace for possibility of petrol price hike in June
The first fuel levy increase in three years will come into effect in June. Here's how it will affect petrol and diesel prices.
The projected decrease in petrol and diesel prices for June has been slimmed down by Treasury's hike in the fuel price levy. Picture: iStock
South African motorists will feel the impact of the fuel levy increase at the pumps when the official price changes for petrol and diesel kicks in on Wednesday, 4 June.
Budget 3.0's inflation-based general fuel levy (GFL) hike will see petrol prices increase by 16 cents to R4.01, while diesel tax will rise by 15 cents to R3.85.
Based on current over-recovery trends, consumers should consider themselves lucky if petrol sees a marginal decrease of 3 cents per litre in June.
There is even the possibility that the fuel levy increase could result in a small hike in petrol prices if the rand weakens or global oil prices rise further this week.
June fuel price: Expected changes in petrol, diesel and paraffin
According to the latest data released by the Central Energy Fund (CEF), over-recoveries of 19 cents per litre are on the cards for petrol prices and 48 cents per litre for diesel.
Petrol 93: Decrease of 20 cents per litre.
Decrease of 20 cents per litre. Petrol 95: Decrease of 19 cents per litre.
Decrease of 19 cents per litre. Diesel 0.05% (wholesale): Decrease of 48 cents per litre,
Decrease of 48 cents per litre, Diesel 0.005% (wholesale): Decrease of 49 cents per litre.
Decrease of 49 cents per litre. Illuminating paraffin: Decrease of 52 cents per litre.
When factoring in the 15 cents and 16 cents per litre of the GFL increase for diesel and petrol, the respective decreases are slimmed down to 33 cents and 3 cents.
Petrol 93: Decrease of 4 cents per litre.
Decrease of 4 cents per litre. Petrol 95: Decrease of 3 cents per litre.
Decrease of 3 cents per litre. Diesel 0.05% (wholesale): Decrease of 33 cents per litre.
Decrease of 33 cents per litre. Diesel 0.005% (wholesale): Decrease of 34 cents per litre.
Fuel price explainer
The fuel levy increase raises the total tax on petrol to R6.37, factoring in the R2.18 Road Accident Fund (RAF) levy, which remains unchanged, as well as the 14 cent carbon tax penalty and four cent customs and excise duties.
Current petrol and diesel prices
Following May's fuel price decreases, a litre of 93 unleaded petrol costs R21.29 per litre, while 95 unleaded costs R21.40.
The wholesale price of 0.05% diesel stands at R18.93 per litre and 0.005% at R18.91.
Why is Treasury hiking the fuel levy?
Finance Minister Enoch Godongwa announced in his third Budget Speech last week that the only new tax proposal would be an inflation-based increase in the GFL for the 2025/26 fiscal year.
Any increase in international fuel prices or a weakening in the rand-dollar exchange rate could cause the 5c to melt away over the next week.
The revised 2025 budget is the minister's third official attempt to balance the country's finances since February's contested speech.
ALSO READ: VAT reversal overshadowed by fuel levy hike
R61.9 billion shortfall
While the previously announced 1% Value Added Tax (VAT) hike falls away following pressure from within the ranks of the government of national unity (GNU), Treasury now has an additional R61.9 billion shortfall to fund over the next three years.
Frank Blackmore, lead economist at KPMG South Africa, said the proposed fuel tax hike represents an inflationary increase of 4% in the fuel price, which is larger than the proposed VAT increases.
READ NOW: Budget 3.0: Fuel levy replaced VAT hike but is it the better option?
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