Finance Minister Enoch Godongwana has warned that government cannot fully shield South African motorists from the next wave of fuel price increases, telling Parliament that any Treasury intervention would simply shift the cost elsewhere.
His comments come as petrol and diesel prices track towards record highs in October, driven by the ongoing war in the Middle East.
Responding to a parliamentary Q&A on rising global oil prices, Godongwana said Treasury has little room left to intervene after stepping in earlier this year.
Government cut R3 a litre from the fuel price through a temporary fuel levy relief measure in April and May. That relief lapsed in June and July, and the minister was blunt about why it cannot simply return.
“Permanently offsetting these increases through the budget would ultimately shift the cost to taxpayers or increase government borrowing,” he said. “Fiscal policy, therefore, involves trade-offs.”
The temporary levy cut was not free.
Treasury estimated that the relief cost R17.2 billion in foregone tax revenue between April and June. It said higher-than-expected tax collection and departmental underspending would recover the shortfall.
Godongwana’s message now is that the same arithmetic applies to any further fuel price relief.
“Any further intervention would need to balance immediate relief to households and businesses against the severity and duration of the shock and available fiscal space, while preserving fiscal sustainability,” he said.
Godongwana: Government can’t fully insulate consumers from fuel price hikes
The minister stressed that fiscal policy focuses on debt stabilisation and long-term economic growth rather than shielding households from every external shock.
He said addressing cost-of-living pressures falls within a broader government programme rather than Treasury’s responsibility alone.
That work forms part of the Medium-Term Development Plan 2024 to 2029, which focuses on protecting vulnerable households and reviewing administered prices such as electricity.
The review will also extend to the fuel price formula itself.
The Department of Mineral and Petroleum Resources is examining how industry margins are calculated across wholesale, retail, storage and distribution.
However, the process is only expected to conclude by March 2027, meaning it offers motorists no immediate relief from the looming October fuel price increase.
October fuel prices could bring another R2 a litre shock
Godongwana’s comments come as fresh Central Energy Fund (CEF) data points to a potential R2-a-litre increase in October.
The projected hike comes as motorists are barely absorbing September’s fuel price increase. Petrol rose by R1.34 a litre in September, while diesel jumped by as much as R3.15. September fuel price hike
Such an increase would push petrol to a fresh record for the second time this year.
The pressure compounds an already difficult year for South African households. Consumer inflation climbed to a two-year high of 5.0% in June before easing slightly.
Household budgets are also still absorbing the impact of last year’s 12.74% Eskom tariff increase.
For motorists, the pressure is becoming increasingly difficult to avoid.
“Government cannot fully insulate consumers from a sustained increase in international oil prices, particularly as South Africa is a net importer of crude oil and petroleum products,” Godongwana said.
Also read: Record fuel prices loom as petrol and diesel face R2 increases
