South Africa: Will Godongwana Extend the Fuel Levy Reprieve or Brace for Inflationary Pressures?

25 May 2022
Daily Maverick (Johannesburg)
analysis By Wayne Duvenage

Wayne Duvenage is a businessman and entrepreneur turned civil activist. Following former positions as CEO of AVIS and President of SA Vehicle Renting and Leasing Association, Duvenage has headed the Organisation Undoing Tax Abuse since its inception in 2012.

Minister of Finance Enoch Godongwana has a tough choice to make: extend the temporary R1.50 fuel levy reduction to enable a softer increase in June, or claw back the levy reduction and watch inflationary pressures of a R2.70 to R3.20 increase in the price of petrol unfold.

Believe it or not, the oil price has often traded well above the current price of $110 per barrel, breaching the $130 mark in July 2008. Then, the price of petrol was only R10.70 for a litre (95 octane petrol on the Highveld). At the end of this month, we are heading for well over R24 per litre of petrol, some 130% higher than in July 2008, despite the price of oil being substantially lower.

The reason for the relatively low price of petrol back in 2008 was, as you may have guessed, due to a far stronger rand exchange rate, which traded at R7.94 to the US dollar in that month. In addition...

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