Government mismanagement contributes to fuel price increases

Fuel and electricity price hikes will not help our economy

Fuel and electricity prices go up this week and are strongly influenced by years of poor administration and mismanagement by Government. The extra revenue from the general fuel levy alone compared to a decade ago would pay for another Gauteng Freeway Improvement Project, but motorists are not feeling the benefits of the ever-increasing taxes. April is a difficult month for consumers. Eskom’s electricity prices to direct customers went up on Monday while the monthly increase in fuel prices takes effect on Wednesday.

Part of the fuel price increase is due to the annual hikes in the fuel levies. This excludes the new carbon tax, which will be added to the fuel prices in June. “OUTA is of the opinion that the general fuel levy, which is now at R3.52 per litre on petrol, is excessive. This levy generated R75bn in revenue in 2018/19 and accounts for 23% of the petrol price,” says Ronald Chauke, OUTA’s Portfolio.

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OUTA believes that Treasury has pushed the general fuel levy too far over the past decade, from R1.21/l at the start of 2008 to this month’s R3.52/l.

In 2008/9, the general fuel levy raised R25bn, an annual collection which has now trebled to R75bn. That extra R50bn is two-and-a-half times the R20bn price tag for the GFIP, which South Africa is now struggling to pay for.

The general fuel levy goes into general revenue rather than being earmarked for road projects.

“OUTA believes there is a need for transparency in the use and allocations of the fuel levy,” says Chauke.

The fuel price increases are also affected by the weak rand/dollar exchange rate.

This is a factor exacerbated by years of Government mismanagement.

The loss of South Africa’s oil reserves removed another cushion for price shocks; again, this was a result of mismanagement and likely corruption.