The South African government has announced it will in August, end a temporary fuel subsidy programme it started in April, which saw Africa’s most industrialized economy reduce its fuel levy, resulting in a 6 billion rand to its tax earnings.
This was disclosed today in a report by Bloomberg after a statement by the Country’s Department of Mineral Resources and Energy was revealed in an email on Monday.
South Africa announced that a reduction of 1.50 rand ($0.09) in the general fuel levy that it introduced in April will be trimmed to 75 cents from July 6 and will be withdrawn from August 3 and also announced an 11% increase in fuel prices.
What they are saying
The country’s energy regulator stated that the lower concession for July will add to the impact of higher international fuel costs to boost the retail price of 95-octane gasoline to 26.74 rand in the Gauteng province, the country’s economic hub.
It added that apart from the 10.6% increase in petrol prices, “Wholesale price of diesel that’s used in agriculture and for emergency power generation, will rise by as much as 2.31 rand per litre.”
In April, the South African government approved a reduction to its fuel levy for two months and sold part of its strategic oil reserves to handle the effects of rising energy prices.
It revealed that the 40% levy reduction is expected to “result in foregone tax revenue of 6 billion rand, all of which will be recouped through a sale of strategic oil reserves due to take place in the fiscal year”.
Fuel subsidy in Nigeria
- In April, Nairametrics reported that following the approval of a revised 2022 budget by the Nigerian Senate, an upward review of the budget amount for petrol subsidy for 2022 by N442.72billion, from N3.557 trillion to N4 trillion was effected.
- Last month, President Buhari in an interview with Bloomberg stated why he refused the call by the World Bank and IMF to remove the fuel subsidy and to unify the exchange rate. President Muhammadu Buhari said “most western countries are today implementing fuel subsidies. Why would we remove ours now? What is good for the goose is good for the gander!”
- “My government set in motion plans to remove the subsidy late last year. After further consultation with stakeholders, and as events unfolded this year, such a move became increasingly untenable. Boosting internal production for refined products shall also help,” he added
