President Cyril Ramaphosa has established a ministerial task team to mitigate the impact of a fuel price increase set for 1 April, as South Africa braces for what could be the steepest fuel hike since 2008.
Ramaphosa announced the measure at the ANC Limpopo conference, warning that the increase is unavoidable due to the ongoing conflict in the Middle East involving the United States, Israel and Iran.
Iran’s closure of the Strait of Hormuz, a critical oil shipping route, has disrupted global supply and sent prices soaring. Market movements indicate diesel could surge by more than 50%, whilst petrol may rise by 30% if no government intervention materialises.
The task team comprises Finance Minister Enoch Godongwana, mineral resources minister Gwede Mantashe, electricity and energy minister Kgosientsho Ramokgopa, and trade and industry minister Parks Tau.
According to the Sunday Times, an insider revealed the team’s mandate extends beyond fuel pricing. “They are not just looking at fuel prices; they are tasked with looking at the whole geopolitical situation and its implications for the country. They will then use that to drill down into the fuel price and how they can work around it,” the source said.
Calls to suspend fuel levy
Concerned parties are calling on the National Treasury to suspend or reduce the fuel levy temporarily, particularly as the April increase in the levy is scheduled to take effect. Such a move could help moderate both fuel and food price increases, though it poses challenges for government revenue.
Fuel levies and taxes currently comprise about a third of the total retail price per litre. Whilst suspending them would ease household pressure, it would impact one of the state’s most effective revenue-collection tools in a country with a limited tax base committed to containing debt.
Economic ripple effects
Rising energy prices are already pushing food costs higher, placing additional strain on South Africans struggling with living expenses. The energy crisis has sent Johannesburg’s key stocks gauge towards its worst month in almost two decades, as the conflict dampens demand for emerging-market assets and plunging precious-metal prices weigh on local miners.
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Farmers preparing to plant winter grains such as wheat report that some fuel retailers are limiting purchases to prevent stock depletion, leaving agricultural operations scrambling for supply. Reduced harvests could extend hardship for households long after a resolution is found.
Ramaphosa acknowledged the severity of the situation, saying Godongwana is equally troubled. “He’s also having sleepless nights because of what’s happening. I told him I’m not sleeping at all because of this challenge that our people are now facing,” the president said.
He warned that elevated living costs will create “more hardships” and restrict government spending capacity. “We need to find ways of controlling our own response,” he said.
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African nations respond to crisis
Governments across the continent, many dependent on refined-fuel imports, are implementing emergency measures to shield their economies from higher energy prices and supply shortages.
Namibia is halving its fuel levies, whilst Kenya is using its petroleum-development duty to help cap costs as filling stations already grapple with supply shortages. Some Ethiopian firms have urged staff to work from home to ease demand as motorists queue for days to fill tanks. Egypt has imposed a 21″00 curfew on restaurants and retailers, though it has secured oil from neighbouring Libya.
Historic oil shock continues
Energy industry experts warn that what has been described as the biggest oil-supply shock in history has reached the one-month mark, with the crisis only beginning. Fierce and widespread attacks in the conflict continue despite the US extending a deadline for Tehran to agree to reopen the Strait of Hormuz.
South Africa had finally started showing signs of recovery after a decade of anaemic growth. However, like fuel-importing countries across the continent, authorities face limited options that won’t carry lasting implications for the economy.
ALSO READ: Fuel price shock expected for April as Middle East conflict drives oil surge
