With a stagnant economy being a major challenge for the Cyril Ramaphosa administration in a country engulfed by a 55.5% poverty headcount, tomorrow’s fuel price increase will chew into the disposable income of the working and middle class, an expert has warned.
Under the weight of local and international pressure – which includes rand depreciation and oil import prices – government has announced a price increase per litre in 93 octane petrol of 99 cents, 95 octane of R1, diesel of R1.24, illuminating paraffin wholesale price of R1.04, illuminating paraffin retail price of R1.39 and liquefied petroleum gas by R1.79 per kilogramme.
Explained Energy Minister Jeff Radebe: “The international prices of petroleum products increased on average during the period under review. This was in line with the higher crude oil prices and the weaker rand against the United States dollar.”
Radebe expected the looming US sanctions against Iran to “put more pressure on crude oil prices”.
While David van Wyk, who is lead researcher with the Bench Marks Foundation yesterday agreed with economist Azar Jammine on the need for government to reduce the fuel levy, he said the country faced “structural economic challenges” which would impact heavily on the country’s working and middle class disposable income.
Van Wyk said: “This fuel increase is bad for the economy. It means an increase in the price of everything from food to transport in a country where 60% of the population earn less than R3 000 per month.
“The petrol price increase will affect the ability of consumers to participate in the economy because of the impact it will have on all sectors.”
He called on the country’s oil producer, Sasol, to “be patriotic” by not charging South Africans global prices – “the same as they charge importers”.
“We should remember that Sasol was established by the apartheid government to counter economic sanctions and to address the 1972 oil crisis.
“But in 1980, Sasol was privatised before the democratic government came to power – a blow to our economy,” said Van Wyk.
Van Wyk said government had to look at finding cheaper sources of oil in Iran and Venezuela.
“But because we are scared of upsetting the United States, this has become impossible.
“Market economy means going anywhere in the world to find goods that are cheaper,” he argued.
South Africa would find it hard to move its economic dependence beyond mining “when fuel and electricity keep going up”.