Government is considering fixing a maximum price for unleaded fuel to cushion the country from escalating prices, Energy Minister Jeff Radebe said on Thursday.
“Government is deeply concerned by the rising cost of petrol in South Africa which is largely caused by the rand dollar exchange rate, and the price of crude [oil],” said Radebe at a post-Cabinet briefing.
A task team, including officials from the Department of Energy and the National Treasury, is examining what to do to cushion the blow of another increase, as the international price of crude oil has kept increasing.
In September the government took a once-off decision to not increase the price of fuel. At the time the DoE said SA had witnessed “sustained increases in fuel prices for the past few months, which placed a strain on consumers”. Radebe previously said he estimated September’s subsidy – which amounted to 20c a litre – would cost around R400m. The subsidy was funded by the Central Energy Fund.
The government has now decided to examine whether it should set a maximum price for unleaded fuel. It has set October 18 as a deadline for the gathering of information on which it will base its decision.
The team looking into the possibility of a price ceiling is also expected to consider what legal steps would be necessary to make this possible.
On Thursday Radebe said: “I am very positive […] with the brand new, from-the-box Cabinet colleague Tito Mboweni – whom the markets seem to love at the moment – that the rand-dollar exchange will be in our favour.
“In the eventuality we might be talking a different story […] the overriding concern is how to cushion people from this negative impact of the fuel price in South Africa.”[Source: Fin24]