Get ready for petrol price pain in South Africa

The Automobile Association of South Africa (AA) thinks Finance Minister Enoch Godongwana’s announcing a general fuel levy (GFL) increase in his 2025 Budget Speech is highly probable, and it is calling for a review of the country’s fuel price structure.

Speaking to eNCA, AA spokesperson Eleanor Mavimbela said the organisation argued that keeping the GFL unchanged every year wasn’t sustainable.

“For the past two years, the Minister of Finance has not increased the general fuel levy. We are anticipating this year that he might increase the general fuel levy,” said Mavimbela.

“We have welcomed the freezing of the general fuel levy over the past two years. We do believe, as the Automobile Association, that it isn’t a sustainable solution.”

“Therefore, we do need to sit down and review the fuel pricing structure,” she added.

Fuel prices are largely determined by fluctuations in the rand-dollar exchange rate and international oil prices. However, the government can control several aspects.

“Within the fuel pricing structure in South Africa are a lot of commodities that feed into it,” said Mavimbela.

“We can sit down and review and find other more sustainable methods of funding those taxes and levies, such as the road accident fund levy, in order to get a more sustainable fuel price that is more affordable for consumers.”

Fees added to the price of a litre of fuel in South Africa include the GFL, Road Accident Fund (RAF) levy, and “other levies”, which include transport, secondary storage, distribution costs, and one or two more minor charges.

In October 2024, Minister of Minerals and Petroleum Resources Gwede Mantashe acknowledged the financial pressure these add-ons place on motorists and said the litre price of diesel and petrol should be around R14.

He added that the GFL and RAF levy distort the price to around R20 per litre.

Speaking at the African Oil Week conference in Cape Town, Mantashe said fuel prices would continue to pressure South Africans if left unaddressed. He is also calling for an urgent review of the fuel pricing structure.

“In the fuel price, there is the general fuel levy, there is the Road Accident Fund, linked to the price of fuel,” he said. “So instead of buying a litre of fuel for R14, you buy it for R20.”

“Our argument is: you are distorting the price of fuel. Let’s find the formula for separating these two things and have the fuel price visible.”

He said the government planned to conclude these discussions in “the shortest possible time”.

Major RAF levy change proposed

In January 2024, Deputy Minister for Transport Mkhuleko Hlengwa said the government should consider adding the RAF levy to the price of alcohol to reduce related fatalities on the country’s roads.

This came after transport minister Barbara Creecy reported on road fatalities over the 2024/25 festive season. Hlengwa said alcohol consumption directly contributed to the high number of fatal accidents.

According to Creecy’s data, 1,502 occurred on the country’s roads over the festive season, an increase of 5.3% year-on-year, or 70 more fatalities than in 2023/24.

She also revealed that nearly 4,000 motorists were arrested for driving under the influence.

“Alcohol consumption, drinking and walking, and drinking and driving have had a direct contribution to the escalation of the numbers to the extent to which we have seen,” said Hlengwa.

“People just have no due regard at all, even in the early hours of the morning or at 09:00 in the morning when you would expect that people would socialise and party in the afternoon.”

Hlengwa said the most effective approach would be to “hit the pockets” of offenders through thorough enforcement, proposing that the authorities go beyond the demerit point system in the Aarto rollout to ensure that fines follow perpetrators.

“Currently, you have a situation where the Road Accident Fund levy comes out of fuel sales,” he added.

“I do not see anything wrong with us insisting, within the alcohol pricing system, a direct charge for the Road Accident Fund, among others.”