South Africa extends temporary fuel levy relief amid Iran war

Cars queue at a Shell petrol station in Johannesburg after the government announced reducing its fuel levy for a month to stop fuel prices rising even further. Image credit: Reuters/Siphiwe Sibeko/File Photo

“To provide further relief and to address concerns of higher inflation and negative impacts on economic growth due to increasing fuel prices, the following relief measures are proposed for May and June 2026,” the departments said in a joint statement.

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Short-term relief

On 31 March 2026, the Minister of Finance, Enoch Godongwana, and the Minister of Mineral and Petroleum Resources, Gwede Mantashe, jointly announced a temporary reduction in the general fuel levy of R3 per litre from Wednesday, 1 April 2026, to Tuesday, 5 May 2026, to provide limited short-term relief to households from rising fuel prices, following the conflict in Iran.

“The relief measure was designed to be fiscally neutral, and the government will implement mechanisms to recoup the foregone revenue within the fiscal framework approved during the 2026 Budget.

“Since this announcement, the continuation of the Middle East conflict has resulted in consistent pressure on global oil prices, which has led to increases in domestic fuel prices,” the duo said.

To provide further relief and to address concerns of higher inflation and negative impacts on economic growth due to increasing fuel prices, the following relief measures are proposed for May and June 2026:

The extension of the temporary reduction in the general fuel levy:

1. Godongwana proposes that the R3 per litre reduction in the general fuel levy for petrol is extended until Tuesday, 2 June 2026. Given the large expected increases in the price of diesel, the minister proposes that the temporary diesel relief be increased by 93 cents to R3.93 per litre, reducing the levy to zero, from Wednesday, 6 May 2026, to Tuesday, 2 June 2026.

   “The general fuel levy for petrol will remain at R1.10 per litre, and the general fuel levy for diesel will decrease from R0.93 per litre to R0.00 per litre.”

2. For June 2026, Godongwana proposes that the level of relief be halved to phase out the relief before July. As a result, the amount of relief from the general fuel levy will be reduced to R1.50 per litre for petrol and R1.96 per litre for diesel, effective from Wednesday, 3 June 2026, to Tuesday, 30 June 2026.

   “This will increase the general fuel levy for petrol from R1.10 per litre to R2.60 per litre and increase the general fuel levy for diesel from R0.00 per litre to R1.97 per litre.”

3. From 1 July onwards, the general fuel levy for petrol will return to R4.10 per litre, and the general fuel levy for diesel will return to R3.93 per litre.

   “The estimated cost of the temporary fuel levy relief from April to June 2026 is R17.2bn in foregone tax revenue. The fuel levy relief measure is designed to be revenue neutral and will be funded through a combination of higher-than-expected tax revenue and underspending, and will not have an impact on the fiscal framework adopted by Parliament following the 2026 Budget,” said the departments.

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Meanwhile, DMPR has initiated a review of the formula, whose conclusion will determine how fuel prices are regulated from now on.

“It should also be noted that according to the Self Adjusting Slate mechanism, the under recovery of importers of petroleum products must also be accommodated, and as such the Slate levy on petrol and diesel will also be adjusted for the month of May.”

Earlier this month, the department said it is reviewing the local fuel price mechanism, with the process to be completed in March next year.