The Central Energy Fund has announced fuel price adjustments for April 2022.

Update: Earlier this month, the South African Minister of Finance,Enoch Godongwana,announced interventions to help bring relief to consumers and the wider industry as steep fuel increases are expected for the month of April 2022.

As a starting point, Phase 1 of intervention will seethe General Fuel Levy temporarilyslashed by R1.50 per litre from Wednesday, 6 April 2022 to 31 May 2022. The General Fuel Levy for petrol will be reduced from the current R3.85 per litre to R2.35 per litre while the R3.70 levy for diesel will be reduced to R2.20 per litre. The Road Accident Fund Levy and the Carbon Fuel Levy remain unchanged.

This intervention will cost the government around R6-billion in foregone tax revenue for the 2 month period and the cost will be recouped by selling strategic crude oil reserves held by the Strategic Fuel Fund and will therefore not have an impact on the fiscal framework outlined in the 2022 Budget.

Phase 2 of interventions, as of June 2022, as proposed by theMinister of Mineral Resources and Energy includes a price cap on 93 octane petrol which will allow retailers to sell below regulated prices. A 3 c/lreduction in the Basic Fuel Price is also on the cards while the Demand Side Management Levy (DSML) of 10c/l on 95 unleaded petrol (inland) is due to be scrapped. Furthermore, the publishing of guidance on diesel prices will also be stopped to promote competition and the Regulatory Accounting System (including the retail margin, wholesale margin and secondary storage and distribution margins) will be reviewed to assess whether adjustments can be made to lower the margins over the medium term. Interventions to reduce price pressure for illuminating paraffin will also considered over the medium term.

“The intention of the temporary reduction of the general fuel levy is to support a phasing in the fuel price increases that we are expecting in the short term. This will go some way in assisting South Africans to adjust to the new reality,” said Godongwana. addressing Parliament on Thursday.

South African consumers have been hit hard in the last few months with unrelenting fuel price increases and for the first time, motorists are now paying over R21 per litre of fuel. However, the fuel price crisis is expected to worsenfollowing the current Russia-Ukraine conflict which has yet to be resolved.

International oil prices and the South African Rand’s performance against the US-Dollar are key factors that determine the monthly fuel price adjustments.

On 24 February 2022,the Brent Crude oil price was recorded at $95.42 per barrel. This was the same day that Russia undertook its military action in Ukraine. Mere days later, the Brent Crude oil price surged to well over $130 per barrel before slowly tapering off to below $100 and then rising once more.International markets, however, remian volatile.

On a more positive note, the Rand’s performance against the US-Dollar has strengthened over the same period.

Fuel price adjustments for April 2022

The Central Energy Fund (CEF) has announced the following increases:

Petrol 95: increase of 36 centsper litre;Petrol 93: increase of 28 cents per litre;Diesel 0.05%: increase of R1.53per litre;Diesel 0.005%: increase of R1.69 per litre;Illuminating Paraffin: increase R2.66 per litre

The Government’s temporary R1.50 reduction of the Fuel Levy has helped to take the sting out of the fuel price increase but this levy is due to be re-instated as of June 2022, so the relief will be short-lived.

Apart from motorists having to pay more for fuel at the pumps,fuel price increases have a severe impact on food production (farming)and increases will have a negative impact on food prices, putting even more pressure on already stretched household budgets.

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