AA warns fuel price shocks could last another seven years

The Automobile Association says temporary fuel levy relief will not address South Africa’s long-term vulnerability to fuel price shocks, calling for strategic reserves and restored refining capacity.

South Africa could remain vulnerable to fuel price shocks for the next five to seven years.

That is the warning from the Automobile Association, which has called on the government to rebuild strategic fuel reserves and restore refining capacity.

Tabling the mini-budget this week, Finance Minister Enoch Godongwana announced a R10 billion relief plan that will see the fuel levy reduced by R3 a litre on diesel and R1.50 per litre for petrol.

But the AA's CEO Bobby Ramagwede says the measure doesn't go far enough.

“The timing thereof is also, it raises an eyebrow, right? The relief is only poised to commence on election day and ends shortly after the December holidays, a time when South Africans are distracted by the festive season.

“It's going to be a very painful return in January back to school and back to work when your taxes revert to norm, and you're likely to face a forty rand a litre fuel price.”

He says the government needs long-term solutions.

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“So, for those of you who have budgets that you can flex to accommodate changes in fuel prices, I'd start preparing myself now.

“For those who do not have that, we, the AA, then call on corporate South Africa to recognise the reality that transport policies now need to evolve. Unfortunately, South Africans, and this is the average South African, cannot afford the cost of fuel.

“And now given that, it means they cannot afford to get to work. That creates a downward spiral. If they cannot get to work, they cannot be paid .”

Meanwhile, Godongwana has denied opposition parties' claims that the temporary fuel levy relief constitutes electioneering.

He says it's purely a coincidence that the implementation of the fuel levy reprieve is on the same day as the elections.

“I was also shocked when I heard [the] EFF [say] that, ‘No, these guys are doing electioneering. They're putting it on the fourth.’

“But he didn't look on December the 2nd, because the change in the fuel price happens on the first week of [the] month, [the] first Wednesday.

“Then the first Wednesday in November happens to be the fourth.”

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