South African motorists face renewed financial pressure at the pumps as National Treasury confirmed it will phase out fuel levy relief measures introduced to cushion consumers from soaring fuel prices.

The relief, which was implemented in April to shield motorists from price increases linked to the Middle East war, will begin its termination in June as government seeks to rebalance the country’s finances.

Treasury will reintroduce R1.50 per litre to petrol prices in June, followed by the remaining R1.50 in July, effectively ending the R3.00 per litre relief programme.

According to data from the Central Energy Fund (CEF), petrol prices had finally moved into a small over-recovery at mid-month, showing positive recoveries of between three and eight cents per litre after three consecutive months of steep increases.

However, the reintroduction of the fuel levy will reverse this trend entirely. Current projections indicate petrol prices will increase by over R1.40 per litre next week despite the over-recovery.

Petrol 93 is expected to show an over-recovery of eight cents per litre, whilst Petrol 95 shows a three-cent over-recovery, but these gains will be negated by the R1.50 levy reinstatement.

Diesel users face a different scenario. Diesel prices have moved into significant over-recovery, with Diesel 0.05% showing an over-recovery of R5.02 per litre and Diesel 0.005% at R4.26 per litre.

The substantial diesel over-recovery is expected to absorb the returning fuel levy, with projections indicating cuts of between R2.29 and R3.05 per litre in June, even with 50% of the fuel levy reintroduced.

Some economists have suggested Treasury might take advantage of the steep diesel over-recovery to reintroduce the full levy of R3.93 per litre. Even in this scenario, diesel prices would still see cuts of between 33 cents and R1.09 per litre.

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Motorists and businesses are bracing for renewed pressure, with diesel prices already exceeding R30 a litre in some areas before any adjustments.

Economists have warned that higher fuel costs could add pressure to inflation and transport costs across the economy, potentially affecting food prices and the cost of goods.

The fuel levy relief was one of several measures government introduced to mitigate the impact of international fuel price volatility on South African consumers.

Treasury has indicated the phasing out of relief measures forms part of broader fiscal consolidation efforts as government works to stabilise public finances.

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