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The DA has today written to the Minister of Mineral Resources and Energy, Gwede Mantashe, to propose a review of the current fuel pricing model following yet another round of fuel price increases. (see here)

On Wednesday, the price of petrol rose by 91 cents per litre to a record high of R18.20 per litre, while the price of diesel rose by between 54 and 55 cents per litre.

This is disastrous for South African families, as these hikes exacerbate the difficulties faced by impoverished South Africans who are already dealing with record-high unemployment and flat or declining real earnings. The sharp rise in fuel prices will have a knock-on effect, as consumers will face higher travel costs, the possibility of higher food prices and lead to rising operational costs for small businesses.

To this end, the DA proposes a review of the fuel pricing model to provide  relief to South Africans. To accomplish this, inputs from major sector stakeholders must be sought urgently, and a new fuel pricing model that recognises the impact of fuel prices on our economy (including high taxes and consumer and producer inflation) must be developed.

According to the Department of Mineral Resources and Energy, the Basic Fuel Price (BFP) is currently based on the import parity pricing principle, that is, how much it would cost a South African importer of petrol to buy the product from an international refinery, transport the product from that refinery, insure the product against losses at sea, and land the product on South African shores. On top of this government imposes various fuel levies which are adjusted annually to fund cross-government expenditure programmes, including the dysfunctional Road Accident Fund.

Many South African households are still reeling from the ANC's years of failure to create a favourable economic environment, as well as its disastrous economic response to Covid-19. These fuel price increases will put additional strain on already overburdened consumers.

Issued by DA