IN SHORT: South Africa’s National Treasury and the Department of Mineral and Petroleum Resources announced on April 29 that the R3 per litre petrol levy cut will be extended to June 2, and that the diesel general fuel levy will be cut to zero from May 6 to June 2. The relief then tapers in June and is fully reinstated from July 1. Total cost to the state: R17.2 billion ($955 million) in foregone tax revenue. Finance Minister Enoch Godongwana says the intervention is revenue neutral, funded through higher-than-expected tax collections and underspending.
South Africa’s government is sacrificing R17.2 billion ($955 million) in fuel tax revenue to shield consumers from the Hormuz-driven oil price spike, cutting the diesel levy to zero and extending petrol relief through June in the most aggressive fuel price intervention since the post-COVID cost-of-living crisis.
The joint announcement by the National Treasury and the Department of Mineral and Petroleum Resources on April 29 extends and deepens measures first introduced on April 1, when the government cut the general fuel levy by R3 per litre on petrol to buffer the impact of record fuel price increases triggered by the Iran war.
- The revised measures run in three phases. From May 6 to June 2: the R3 per litre petrol reduction stays in place, and diesel relief is deepened by 93 cents to R3.93 per litre, reducing the general fuel levy on diesel to zero. From June 3 to June 30: relief tapers to R1.50 per litre for petrol and R1.96 per litre for diesel. From July 1: full levies reinstate at R4.10 per litre for petrol and R3.93 per litre for diesel.
- The R17.2 billion total cost covers the full April to June window. Treasury has been explicit that the package will not affect the fiscal framework approved in the 2026 Budget, describing it as funded through a combination of higher-than-expected tax revenue collection and underspending across departments. Finance Minister Godongwana framed the intervention as essential given that the Middle East conflict has produced "consistent pressure on global oil prices which has led to increases in domestic fuel prices."
- The diesel zero-levy decision is particularly significant. Diesel powers South Africa’s trucking network, agriculture, mining, and backup generators across the economy. A diesel price surge feeds through immediately to food inflation, logistics costs, and electricity backup costs for businesses and households. Cutting the levy to zero for a month absorbs the sharpest part of the price spike at the point where it would do the most economic damage.
- South Africa is not alone. Businessday NG noted that Zambia, Namibia, Zimbabwe, Ghana and Kenya have all introduced fuel relief measures in recent months as African governments navigate the same trade-off between protecting consumers and maintaining fiscal discipline. The difference is scale: South Africa’s R17.2 billion commitment is among the largest continent-wide.
- The government also confirmed that the Department of Mineral and Petroleum Resources has initiated a review of the fuel pricing formula, which could reshape how pump prices are regulated beyond the current crisis. The existing formula, which links retail prices directly to Brent crude and the rand exchange rate, amplifies external shocks into domestic consumer prices with limited buffering capacity.
- SARB’s March MPR projects inflation peaking at 4% in Q2 2026 before easing to the 3% midpoint target by late 2027. The fuel levy relief will contain but not eliminate that Q2 peak. When the full levy reinstates in July, pump prices will adjust upward unless oil prices have fallen significantly.
Treasury stressed that the "self-adjusting slate" mechanism, which accounts for under-recoveries by petroleum importers, will continue to influence pump prices alongside the levy relief and that further slate adjustments are expected for May.
The Bigger Picture: R17.2 billion is not a trivial commitment for a government managing a post-subsidy fiscal adjustment. That Treasury is spending it reflects the political and economic severity of the current fuel shock. The diesel zero-levy is the sharpest signal: South Africa’s entire goods and agricultural economy runs on diesel, and a zero levy for a month is the government buying itself time while the oil market remains volatile. The harder question comes in July. If Brent is still above $100 when the full levy reinstates, the price shock that was deferred will arrive in one hit. Treasury knows this. The fuel pricing formula review is the signal that the government is looking for a more durable structural answer, not just a month-by-month patch.
Source: National Treasury / BusinessDay / BusinessTech
