Update: Govt working to lessen the impact of fuel price increases

Update: National Treasury has clarified that a panel of experts investigating zero-rated VAT items will not also be investigating the impact of the fuel price increase. This article, which previously stated that the panel would be considering the rising cost of fuel, has been updated to reflect this. 


Government is working to lessen the impact of fuel price increases on the poor, Minister of Communications Nomvula Mokonyane said at a post-Cabinet briefing on Thursday. 

The inland price for a litre of 95 octane unleaded petrol rose to R16.02 on Wednesday. The coastal price is R15.43. Prices are expected to increase again in August.

This price hikes will have an impact on the prices of transportation, goods, food and paraffin, which many low income households depend on.

The ANC, meanwhile, on Wednesday asked government to freeze the hikes to the cost of petrol, saying they were becoming “unbearable”.

Mokonyane said Cabinet had noted the impact of the fuel price increases during their Wednesday meeting, but reminded reporters that fuel prices were largely determined by the Brent Crude Oil price and the rand’s exchange rate to the dollar.

“These cyclical currency changes, which result in price fluctuations, have impacted negatively on consumers, particularly the poor. The rise in petrol prices directly affects transport costs, food prices and particularly the cost of staple food and medicine,” said Mokonyane.

Asked about the ANC’s statement asking for a fuel price hike freeze, Mokonyane said Finance Minister Nhanhla Nene, Energy Minister Jeff Radebe and Mineral Resources Minister Gwede Mantashe were working together to find an informed solution to the impact of the hikes.

“The ANC comment on fuel price is far from what needs to be done, we believe it should be fundamental that we give the members of the ANC the benefit of knowledge rather than have remarks that are far from reality. Radebe will update the country on the matter,” she said.

She said there was much government was considering in the long term to minimise the South African fuel price’s exposure to international dynamics, such as developing South Africa’s own fuel production capacity.

*Update: National Treasury has clarified that the panel of experts investigating zero-rated VAT items will not also be investigating the impact of the fuel price increase. This article has been updated to reflect this. 

Statement by National Treasury: 

National Treasury has noted media reports that Cabinet has expanded the mandate of the Independent Panel of Experts appointed to review the current list of zero-rated items to include the impact of fuel hikes. This is not true. The statement on the Cabinet meeting of 4 July 2018, makes no such reference.

It merely assures South Africans that government is making an effort to alleviate the challenges faced by poor communities. In that context, it quotes the appointment by National Treasury of the independent panel of experts to review the list of zero-rated items as an example of the measures aimed at alleviating the challenges faced by poor communities. The mandate of the panel has not been expanded to include the impact of fuel hikes.

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