South Africa hit by record diesel price hikes despite fuel levy cut

JOHANNESBURG (AP) — South African motorists were on Tuesday headed to gas stations in large numbers in anticipation of record fuel hikes that will come into effect at midnight as the world continues to feel impacts of the Iran war that has affected global oil and fuel prices.

This is despite the country's Finance Minister Enoch Godongwana on Tuesday announcing a 3 rand ($0.18) decrease per liter of fuel in an attempt to cushion against the price shock.

The 7.51 rand ($0.44) price increase for diesel, the highest on record, and the 3.06 rand ($0.18) for gasoline has already sent shock waves across the southern African nation.

By Tuesday evening, some gas stations in the east of Johannesburg were turning motorists away as they had run of both diesel and gasoline.

At some stations, only gasoline was available and those seeking diesel were turned away. Some lines were visibly building up at some of the stations that still had fuel.

Godongwana said on Tuesday that the ongoing conflict in the Middle East had increased risks to global energy markets and placed pressure on domestic fuel prices.

The decreased fuel levy for the month of April, before South Africa announced adjusted fuel prices again in March, would cost the government 6 billion rand (more than $351 million) in lost tax revenue.

The country has also been affected by operations and logistical delays in its fuel distribution as dozens of fuel stations ran dry and some fuel stations started rationing fuel purchases to customers, with some putting up restrictions of between 30 to 50 liters (8 to 13 gallons per car).

“Even after fuel levies were reduced, these are the largest increases in recent history and would be devastating for consumers,” said Theuns Du Buisson, an economic researcher at the Solidarity Research Institute.

He said that the fuel increases, especially the record increase for diesel, would have a devastating result on the cost of logistics and transportation, with knock-on effects on inflation in coming months.

With a majority of South Africans using public transport, mainly minibus taxis and buses, the impact is likely to be felt mostly by low-income households, Du Buisson said.

On Tuesday, the bus service in the capital, Pretoria, was disrupted, because of fuel shortages at the city's bus depots, the municipality said.

Michelle Gumedecontributed to this report.