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Is there a ray of hope for South Africans still reeling from the recent fuel price increase?
This comes after Finance Minister Enoch Godongwana called for changes to how South Africa calculates fuel prices. During a recent oral question and answer session in parliament, Godongwana expressed his concern about the price increases, to the point where the government may have to intervene and reform the petrol price.
Furthermore, Energy Minister Gwede Mantashe confirmed that the government is looking into several ways to reduce fuel costs. One option is to separate the fuel levy from the primary fuel price.
Even though the government intends to investigate the matter, the trade union Solidarity has rejected the Mineral Resources and Energy Minister’s proposals to make adjustments to the fuel price formula.
According to Solidarity, adjustments to the fuel price formula will be insufficient on the one hand and an obstacle to bringing real, long-term relief to South Africans on the other.
“Mere adjustments will not go far enough. Half-hearted reform efforts would actually stand in the way of cheaper fuel. Separating the fuel levy from prices, as Mantashe suggests, will do nothing to reduce the burden on consumers; instead, it will place an extra administrative burden on consumers,” said Theuns du Buisson, Economic Researcher at the Solidarity Research Institute.
According to the trade union, tax relief and petrol deregulation are the only methods to reduce fuel prices consistently.
“The solution is twofold. Firstly, the levy must be reduced. Secondly, the price of fuel must be deregulated. While the minister is arguing about the pricing formula, everyone could benefit much more from complete deregulation – the elimination of the pricing formula in its entirety,” Du Buisson concluded.
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