AA welcomes fuel price review, saying users are struggling

The Automobile Association (AA) has welcomed President Cyril Ramaphosa’s announcement of a fuel price review at his opening of parliament address on Thursday.

Ramaphosa said the Government of National Unity (GNU) would undertake a comprehensive review of administered prices, including the fuel price formula, to identify areas where prices could be reduced.

“The announcement by the president validates our calls for a fuel price review to mitigate rising fuel costs, which continue to add pressure on already embattled consumers,” the AA said.

“As far back as 2019 the AA called for a review of the fuel pricing structure, and an audit of all the components that comprise the fuel price. We noted at the time that fuel prices impact on all South Africans and that an assessment of the fuel pricing formula is necessary to determine whether all components are properly calculated and still necessary on the current formula.”

Little had been done to initiate such a review and Thursday’s announcement by the president was a step in the right direction, the association said.

Fuel prices have increased steadily in the past five years. Since January 2022, a litre of ULP 95 petrol inland has increased from R19.61 to R24.25/l, an increase of almost R5/l. Added to this is the inclusion of two substantial taxes on fuel — the General Fuel Levy, pegged at R3.96/l for petrol and R3.84/l for diesel, and the Road Accident Fund (RAF) levy at R2.18/l for petrol and diesel. Combined these levies contribute R6.14 to every litre of petrol and R6.02 to every litre of diesel sold in SA. 

“While we are cautious about simply scrapping these levies outright, we believe there is room for movement in specifically the RAF levy portion of the taxes. We also believe a comprehensive review may highlight other areas within the fuel pricing formula that can be better dealt with to mitigate rising fuel costs,” the AA said.

It added that a fuel price review should be an open process that involves civil society organisations such as itself and others.

“The process must now unfold quickly. The outlook for fuel prices in August is bleak with little or even no relief forecast. Against this backdrop, and the major role fuel prices play in our economy and on personal budgets, the fuel price review is long overdue, and our hope is that it gets under way as soon as possible,” the AA said.

The Central Energy Fund expects minor cuts of between 3c and 8c a litre to petrol and diesel prices in August.