How Jeff Radebe's fuel price intervention could backfire
The energy minister has given motorists a reprieve, in a move one economist calls 'illogical and dangerous'
The government will spend at least R500m to finance the shortfall in fuel prices in September, energy minister Jeff Radebe said on Tuesday. The fuel price had been expected to rise 25c a litre on September 5, partly due to wage increases for petrol attendants that comprise an element of the price. Due to ongoing and sharp escalations in the price, the government capped the increase at 5c a litre on Monday. It is the first time since 1990 that the government has contained fuel price increases. It comes after trade unions and opposition parties pressured the government to act on the record-high prices.
The shortfall will be funded from the Slate levy account, which balances out underrecovery and overrecovery of the price at the pumps with the daily fluctuations in the oil price on the market. It is administered by the Central Energy Fund, a 100% state-owned company. Radebe said that he had signed permission for the surplus funds to be used to fund the shortfall. Econometrix chie...