South Africa will today cut its fuel subsidy by half and finally end the program next month, despite gasoline prices rising by 10.6% to a record high.
The country’s Department of Mineral Resources and Energy confirmed that the government will cut the intervention from 1.50 rand ($0.09) to 75 cents, and wear it off on August 3. The move will add to the already high fuel costs, and push the cost of a litre of gasoline in Gauteng Province to 26.74 rand ($1.62), a record high for the country.
Without the subsidy the cost per litre of diesel will rise by 2.31 ($0.14) rand while the cost per litre of paraffin will increase by 2.21 rand ($0.13).
“Wholesale price of diesel that’s used in agriculture and for emergency power generation, will rise by as much as 2.31 rand per litre.” said the department.
South Africa first kicked initiated its fuel subsidy program in April 2022 to cushion the country against rising fuel prices globally following the conflict between Russia and Ukraine. The program was meant to end in June. However, it was extended for an additional two months. Media reports show that the country has lost 6 billion rand ($362.8 million) in tax earnings as a result of the subsidy.
In June, the government announced that it is considering other alternatives to provide cheap fuel, including importing its crude oil from Russia.
(1 rand = $0.06)