R10bn in temporary fuel-levy relief announced amid record fuel prices
Finance Minister Enoch Godongwana announced another round of temporary reductions to the fuel levy in response to a surge in fuel prices to record levels, following global disruptions to supply that have arisen after the US and Israel declared war on Iran earlier in the year.
The fuel levy for diesel will be reduced by R3 a litre from November 4 to December 1, 2026, while the fuel levy applicable to petrol will be reduced by R1.50 a litre over the same period.
The diesel levy will then be reduced by R1.50 a litre and petrol by R1 a litre until January 5, 2027.
“These measures will provide R10-billion in support, at a fiscal cost of R10-billion in foregone revenue.
“To fund this support, the R10-billion that was transferred to the Central Energy Fund will be returned to the National Revenue Fund to finance this relief,” the Minister stated in his Medium-Term Budget Policy Statement speech to lawmakers on Wednesday.
Earlier in the year, temporary fuel-levy relief was also introduced between April to June at cost of about R22-billion.
The National Treasury has reduced what it expects to collect from the fuel levy in 2026/27 by R30-billion; a figure that takes into account the direct cost of the relief provided, as well as behaviour changes in response to higher fuel prices which is reducing overall consumption.
The latest relief measure comes amid record retail prices, with large hikes of above R3 a litre announced for both petrol and diesel in October, after crude oil prices rose to above $100/bl.
The decision to extend further relief was based on a cost-benefit analysis that determined that the reduction in the fuel levy would be positive for households, consumption, inflation and growth.
Any further relief beyond January 5 would be based on a similar assessment and would take into account the circumstances at the time as well as what space remained to provide relief in a fiscally neutral manner.
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