Finance Minister Enoch Godongwana says the R1.50 cent cut in the general fuel levy which will take effect on Wednesday next week will help cushion further fuel price hikes.
The oil price jumped to well above $100 a barrel after Russia invaded Ukraine in February and this has led to a steep increase in local fuel prices.
The minister says the cut in the levy will be financed through the sale of R6 billion worth of strategic oil reserves.
Godongwana was addressing the National Assembly on Thursday afternoon.
He says other measures will be introduced to soften the blow of high fuel prices from June the first – including capping the price of 93-grade petrol.
“The proposed reduction of the general fuel levy will be funded by a liquidation of a portion of the strategic crude oil reserves. In this instance, the revenue forgone by the reduction in the levies will be recouped through a sale of strategic crude oil reserves, which are held by the strategic fuel fund, which is a subsidiary of the central energy fund. The sale will be required, to raise around R6 billion,” says the minister.
In March, the South African Petroleum Industry Association (SAPIA) since warned that ongoing rapid petrol price increases will have a huge negative impact on the distribution of essential goods.
In the video below, the Finance Minister addresses Members of Parliament: