South Africa Cuts Fuel Tax Amid Rising Energy Costs

South Africa on Tuesday announced a temporary reduction in its fuel tax to help offset soaring global oil prices caused by the ongoing Iran conflict, even as local pump prices reached one of the steepest increases in recent memory.

The government said the general fuel levy would be reduced by three rand per litre, a measure intended to provide temporary relief to motorists.

Despite this, diesel prices are set to rise more than seven rand per litre, representing roughly a 40 percent increase, while petrol will increase by about 15 percent. Paraffin, widely used by lower-income households for lighting, heating, and cooking, is expected to surge by 93 percent.

The finance and petroleum ministries confirmed that the tax cut will cost approximately six billion rand ($352 million) in foregone revenue, which the government plans to recoup elsewhere to maintain fiscal neutrality.

Finance Minister Enoch Godongwana told reporters, “I don’t know where I’m going to find this money for now,” highlighting the challenge of balancing relief measures with budget constraints.

The government noted that work is underway on a broader support package aimed at assisting households and key sectors of the economy, following a previous proposal to increase value added tax that caused political friction within the African National Congress-led unity government.

Oil prices have surged globally since disruptions to tanker shipping through the Strait of Hormuz, triggered by the U.S.-Israeli military campaign in Iran. Brent crude and other international benchmarks have seen sharp increases, which have contributed directly to domestic pump price spikes.

While South Africa has largely avoided fuel queues, some stations reported shortages as motorists rushed to fill up ahead of the price increases.

Minibus taxi operators, the country’s primary form of public transport, have warned that fares may rise in response to the higher fuel costs