Business Edge | South Africa Braces For End of Fuel Subsidy

Only a few hours after South Africa announced an end of the fuel relief subsidy introduced earlier in the year to curtail the effects of the steep rise in the retail price of petrol following the outbreak of war in Ukraine, the government announced an extension for another sixty days. South Africa’s finance minister Enoch Godongwana wrote to the country’s Parliament to appeal for an extension of the R1.50 reduction on every litre of petrol sold between June and July, and a 75 cent reduction from July to August – meaning that the reprieve will lapse on August 3. To cover this two-month continuation, the country is expected to spend some 4.5 billion rands which directly impacts the country’s fiscal plans for the year. To discuss the pending end of South Africa’s fuel subsidy on Business Edge with Tolulope Adeleru-Balogun is Wayne Duvenage, CEO of Organization Undoing Tax Abuse from Johannesburg, South Africa.

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The issue of fuel subsidy hasn’t been a long term issue in South Africa as it has been in a country like Nigeria. As a matter of fact, the technical term used for it is “temporary fuel levy relief” and it was introduced only in April, following the sudden sharp increase in the price of petrol and other fuels. Even before the commencement of the Russia-Ukraine war, fuel prices in South Africa have been high as a result of levies on it. “We pay ten rands per litre before we put one drop of petrol [in the car],” Duvenage says. When prices now skyrocketed, the government stepped in to make it bearable for the citizenry.

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He also thinks that despite the government’s two-month extension, it is likely that they extend it a little more, depending on factors such as the war in Ukraine and the strengthening of the rand at the expiration of this deadline.

Watch in full above.

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