The Automobile Association (AA) of South Africa has called on Finance Minister Enoch Godongwana to maintain the current fuel levy in the upcoming National Budget Speech on 19 February. AA CEO Bobby Ramagwede emphasized that the association does not anticipate any increases in the levy, urging the government to reassess its structure due to already sufficient road maintenance allocations.
Ramagwede highlighted that South Africa’s road transport budget exceeded R140 billion in the previous financial year. Increasing levies, he warned, would only add to the financial burden on consumers, who are already grappling with high living costs. Currently, around 28% of the petrol price South Africans pay at the pump consists of levies, with approximately 10% allocated to the Road Accident Fund (RAF) and 17% to the general fuel levy.
The CEO further pointed out that these levies contribute to South Africa’s higher fuel prices compared to neighbouring countries. Elevated fuel costs have a cascading effect on consumer spending, economic participation, and overall welfare due to their significant impact on inflation.
Global and Local Economic Pressures
Recent surges in oil prices, driven by U.S. sanctions on Russian oil and robust economic growth in the world’s largest economy, have further complicated the fuel price outlook. Additionally, the weakening rand, largely due to a stronger U.S. dollar, has placed added pressure on the cost of imported oil.
“The recent sharp rise in oil prices, and consequently fuel prices, will accelerate inflation,” said Investec chief economist Annabel Bishop.
Breakdown of Fuel Price Components
The fuel price in South Africa is primarily determined by four key components:
- General Fuel Levy
- Road Accident Fund (RAF) Levy
- Basic Fuel Price
- Wholesale and Retail Margins
Wholesale and retail mark-ups account for nearly 15% of the petrol price, while the actual fuel cost constitutes between 53% and 55% of the total price at the pumps.
Addressing Transport Sector Challenges
Beyond fuel levies, the AA has urged the Finance Minister to address critical transport sector issues. The association has repeatedly emphasized the need for better governance of the RAF, improved road safety measures, and enhanced public education and law enforcement to encourage compliance with traffic regulations.
Additionally, the AA has called for improved allocation of funds within government departments to ensure that resources are utilized effectively rather than being redirected back to the National Treasury due to underuse.
Public transport also remains a key concern. Ramagwede highlighted the pressing need for increased investment in South Africa’s public transport infrastructure, particularly the railway and taxi industries, which serve as the backbone of the country’s commuting network. Upgrading deteriorating transport infrastructure and integrating different transport systems, he argued, would significantly enhance the commuting experience and ease reliance on private vehicles.
Main Image: The AA
