In a move that could reshape one of the most politically sensitive components of South Africa’s economy, the Department of Mineral and Petroleum Resources has confirmed that the country’s fuel pricing system is under formal review. The announcement comes as millions of South Africans grapple with record-high fuel costs that have driven up the price of everything from bread to bus tickets.
Officials say the review is aimed at identifying “local levers” that government can pull to ease pressure on consumers, even when global oil prices and currency fluctuations remain beyond the country’s control.
“We cannot change the price of a barrel of oil in Saudi Arabia overnight, and we cannot fix the rand-dollar exchange rate with a wave of a wand,” said Deputy Director-General for Petroleum Policy, Thabo Makhubela, during a media briefing in Pretoria on Wednesday. “But what we can do is scrutinize every single local cost that gets added to that litre of petrol before it reaches your tank. And that is exactly what we are doing.”
How South Africa’s Fuel Price Is Calculated
Currently, South Africa’s fuel price is composed of several elements. Roughly one-third is determined by the international price of crude oil and refined products, converted into rands. Another significant chunk is made up of taxes and levies, including the General Fuel Levy (currently temporarily reduced) and the Road Accident Fund (RAF) levy. The remainder consists of wholesale and retail margins, transport costs, and the service cost to maintain strategic fuel stocks.
It is these local margins—the slice of the pie that goes to petrol station owners, wholesalers, and distributors—that the department is now re-examining.
“We have not adjusted these margins meaningfully in years, even as the operating environment has changed dramatically,” Makhubela explained. “We need to ask hard questions: Are these margins still fair? Are they still efficient? Or have they become a hidden tax on the poor?”
Temporary Relief Already in Place
The review builds on emergency measures government introduced earlier this year, when it slashed the General Fuel Levy by R3 per litre—a temporary intervention that has provided some breathing room for households. That cut, however, is set to expire unless parliament votes to extend it.
“We are acutely aware that the R3 reduction is a sticking plaster, not a cure,” said Makhubela. “The review is about finding a cure.”
What Could Change?
While no final decisions have been made, sources close to the review process say several options are on the table:
- Capping Wholesale Margins: Currently, wholesalers operate with a regulated margin that allows for cost recovery plus profit. The department is considering introducing a sliding scale or a hard cap on these margins when fuel prices exceed a certain threshold.
- Restructuring Retail Margins: Petrol station owners have long argued that their margins—often around R1.80 per litre for petrol and slightly more for diesel—are too thin to keep aging pumps and convenience stores operational. However, consumer advocates counter that some retailers have become overly profitable, particularly those attached to large supermarket chains.
- Geographic Pricing Reform: Currently, fuel costs more in inland provinces like Gauteng and the Free State due to transport costs from coastal refineries and depots. The review may explore subsidies or equalization mechanisms to reduce the inland price premium.
- Strategic Stock Levy Adjustment: A small portion of each litre goes toward maintaining South Africa’s strategic fuel reserves. The department is considering whether this levy could be temporarily suspended or reduced without jeopardizing energy security.
Stakeholder Reactions
The review has drawn mixed reactions from industry players and civil society.
The Fuel Retailers Association (FRA) expressed caution, warning that squeezing retail margins too hard could force independent petrol stations—already struggling with load-shedding-related generator costs—to close their doors.
“We are not the villains here,” said FRA spokesperson Reggie Sibiya. “Many of our members are small business owners who employ five, ten, twenty people. If you cut their margin, you cut their ability to stay open. Then where will people buy fuel?”
Consumer advocacy group Outa (Organisation Undoing Tax Abuse), however, welcomed the review with enthusiasm.
“For years, we have argued that the fuel pricing formula lacks transparency,” said Outa’s executive director, Wayne Duvenage. “There are layers of middlemen whose costs are passed directly to the motorist with no competitive pressure. Any review that shines a light into those dark corners is a step forward.”
The South African Petroleum Industry Association (SAPIA), which represents major oil companies like Shell, BP, and Sasol, struck a more neutral tone, saying it “looks forward to engaging constructively with the department to ensure a stable and sustainable fuel supply chain.”
Supply Stable, for Now
On the question of supply, the department sought to reassure the public that there is no imminent shortage. Despite ongoing refinery challenges—including the closure of the Sapref refinery in Durban—officials said imports have filled the gap and that strategic stockpiles remain healthy.
“We are not facing a supply crisis,” Makhubela said. “But we are facing an affordability crisis. That is the problem we are trying to solve.”
Longer-Term Solutions
Beyond the immediate review of margins, the department is also exploring more structural interventions. These include:
- Expanded public transport options to reduce fuel demand
- Incentives for fuel-efficient and electric vehicles, including potential import duty reductions
- Support for vulnerable households, such as targeted fuel vouchers or expanding the social relief of distress grant
- Encouraging local biofuel production to reduce dependence on imported crude
What Happens Next?
The department has opened a 60-day public comment period, inviting submissions from industry, civil society, and ordinary citizens. A series of public hearings will be held in all nine provinces, with the first scheduled for next month in Soweto.
A final proposal is expected to be submitted to Cabinet by the end of the third quarter, with any legislative changes likely to take effect in early 2027.
For now, motorists filling up at the pumps can only watch the digital displays tick upward and hope that the review delivers more than just another round of consultations.
“My car takes 95 unleaded,” said Thandeka Msimang, a nurse from Thembisa who commutes 60 kilometers each day to work. “Last year, a full tank cost me R750. Now it’s over R1,100. I have cut meat from my groceries. I have cut data from my phone. I cannot cut anything else. Please, government—not more meetings. Just help us.”
The department says it has heard that plea. Whether the review translates into tangible relief remains to be seen.
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