MTBPS 2026 | Godongwana provides fuel price relief again — but at what cost?

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Opens in new windowOpens in new windowOpens in new windowOpens in new windowOpens in new windowOpens in new windowEnter fullscreen mode displaying this image.ExpandFinance minister Enoch Godongwana. File photo: Reuters/Esa Alexander Story audio is generated using AI

Finance minister Enoch Godogwana has announced that the government will again provide temporary fuel price relief, saying that the fuel levy will be reduced by R3/l for diesel and R1.50/l for petrol from November 4 until December, which will reduce in value thereafter until January.

The minister made the announcement while tabling the 2026 medium-term budget policy statement (MTBPS) in a joint sitting of parliament on Wednesday afternoon in Cape Town.

He outlined that the fuel relief would add up to R10bn.

“The relief will continue at a lower amount until January 5 2027. The diesel levy will be reduced by R1.50/l, and the petrol levy by R1/l. These measures will provide R10bn in support, at a fiscal cost of R10bn in foregone revenue.

“To fund this relief, the R10bn that was transferred to the Central Energy Fund will be returned to the National Revenue Fund and put into the Contingency Reserve. This intervention will help ease cost-of-living pressures without compromising the sustainability of the budget.

However, the government is expected to take its second major knock in general fuel levy collections as a result of fuel price shock relief that it is expected to present, and it is also unlikely to recover revenue lost as a result of the latest relief provisions.

The difficult choices of the past few years were made for a purpose: to restore stability today so that we can build a faster-growing, more inclusive and more resilient economy tomorrow

Godongwana said the National Treasury sought to help South Africans navigate a difficult global environment while responding to domestic priorities, leading to the necessary decision to provide fuel relief for the second time this year.

“Geopolitical conflict has pushed up global oil prices and led to a sharp rise in the cost of living for businesses and households. Because we have rebuilt fiscal buffers, the government is in a stronger position to respond, including by providing temporary fuel levy [relief] again.

“The difficult choices of the past few years were made for a purpose: to restore stability today so that we can build a faster-growing, more inclusive and more resilient economy tomorrow.”

Briefing reporters before the tabling, Godongwana said the National Treasury would probably have to forfeit the rest of the revenue foregone as a result of providing relief to the public in the general fuel levy, and the rest will be left up to “prayer”.

“We don’t have an instrument to recover whatever money we forfeit. We pray. We lost money, but through prayer, you can manage to say that despite forfeiting money, we manage to collect … more [elsewhere].”

National Treasury director-general Duncan Pieterse told reporters that fuel revenue collections are going to be R30bn lower than previously expected in 2026/2027 due to the fuel levy relief and consumer behaviour changes.

General fuel levy collections plummeted in March from about R11bn to just over R2bn — less than half of the revenue from the same period a year ago — due to relief that the government introduced from the petrol price shocks that came as a result of the US-Iran war.

In the MTBPS, Godongwana admitted the general fuel levy collections were weak in April, saying: “The weak performance in fuel levy collections was driven mainly by the temporary general fuel levy relief implemented between April and June 2026.”

As the US-Iran war continued to bite in March, minister of mineral and petroleum resources Gwede Mantashe and Godongwana agreed to institute a one-month reduction of the fuel price hike from R4.10/l to R1.10/l through a fuel levy cut for temporary relief.

Windfall tax gains from high commodity prices provide a near-term benefit to revenue collection, while fuel levy collections are expected to normalise after the relief provided in 2026/2027

According to the MTBPS, general fuel levy collections were at about R8bn in January and were climbing to just under R12bn by March. However, when the relief was announced in April, collections fell off a cliff to just above R2bn. They have since rebounded to rise above R6bn.

By comparison, general fuel levy collections were at more than R6bn in April last year and hovered around the R8bn mark for much the remainder of 2025.

“Windfall tax gains from high commodity prices provide a near-term benefit to revenue collection, while fuel levy collections are expected to normalise after the relief provided in 2026/2027.”

The MTBPS said over the MTEF period, R20.5bn will be added to the provincial equitable share to compensate provinces for increased costs in health and education, and R21.8bn is added to the local government equitable share for the increased bulk services and free basic provisions.

“The general fuel levy shared with metropolitan municipalities is allocated an additional R13.4bn,” the MTBPS said.

Meanwhile, calls have emerged for Godongwana and Mantashe to repeat the relief intervention that was introduced in March, after the fuel price shot up this past month to R30/l.

African Transformation Movement MP Vuyo Zungula has called on Mantashe to review the fuel-pricing structure and change the tax and levy composition to reduce the price of fuel by up to R6/l.

Calls have also emerged for the government to scrap provisions for the Road Accident Fund from the fuel levy to give added relief to consumers and motorists.

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