AfriForum calls for fuel levy cuts amid global energy crisis

The civil rights organisation AfriForum urges Enoch Godongwana, the Minister of Finance, to provide relief to the South African economy and consumers as the escalating conflict in Iran drastically hikes oil prices. The recent outbreak of conflict in the Middle East has triggered a global energy crisis, with the oil price surging more than 40%. Some economists estimate it could rise above $150 a barrel soon. This concerning development is assured to drastically increase the fuel price, causing a ripple effect throughout the global and domestic economy as almost all other prices rise due to the increased cost of transport.

In a letter sent to the Minister today, AfriForum argues that the type of action it is recommending is not unprecedented. In March 2022 Godongwana, in cooperation with Gwede Mantashe, the Minister of Mineral Resources and Energy, jointly announced a temporary reduction in the general fuel levy of R1,50 per litre to provide relief to households from rising fuel prices following the conflict between Russia and Ukraine. “AfriForum, alongside many economists, believe this to be the appropriate approach to cushion the impact of this latest crisis of a similar nature,” writes Ernst van Zyl, AfriForum’s Head of Public Relations, in the letter.

“People often underestimate the effect of a fuel price hike on the price of goods. Raw materials need to be transported to be turned into intermediate goods. Intermediate goods need to be transported to be turned into final goods. Final goods need to be transported to be sold to consumers. Every step becomes more expensive if the fuel price increases,” concludes Van Zyl.