Budget 3.0 proposal reverses positive fuel price momentum, say industry leaders
South Africans may have breathed a sigh of relief following the scrapping of a proposed VAT increase, but any optimism was short-lived. In a move that has sparked widespread concern, Finance Minister Enoch Godongwana has proposed a fuel levy increase in the latest Budget 3.0 speech — the first adjustment in three years.
If approved, the General Fuel Levy (GFL) will increase by 16 cents per litre for petrol, bringing it to R4.01, and 15 cents per litre for diesel, raising it to R3.85, with the changes set to take effect on 4 June 2025.
Industry stakeholders are warning that this move could reverse the modest gains consumers and businesses have recently experienced, especially following three consecutive fuel price decreases.
“Should the budget be approved this will be a blow to South African consumers and businesses,” warns Lebo Ramolahloane, National Vice Chairperson of the South African Petroleum Retailers Association (SAPRA).
Ramolahloane points to projections from the Central Energy Fund (CEF), which had forecast June price cuts of around 23 cents for petrol and 50 cents for diesel. The proposed fuel levy increase, he argues, would effectively erase those savings, pushing pump prices higher despite market conditions suggesting relief.
Adding to the complexity is the global oil market. Brent crude prices have been on an upward trajectory following the pause in the U.S.-China tariff war on 12 May 2025, increasing the cost of fuel imports and further straining the local economy.
“The levy increase adds to inflationary pressures in our already fragile economy, where growth forecasts aren’t looking promising and are also dependent on the outcomes from trade talks that will take place between SA and the USA,” Ramolahloane explains.
For households and businesses alike, the implications are far-reaching. Rising fuel costs affect everything from daily commuting expenses to the price of goods and services, as transportation and logistics sectors absorb the increased cost burden.
“The 16/15 cent increase impacts the positive momentum that was being enjoyed from the previous three consecutive decreases,” Ramolahloane concludes. “Should there be a decrease come 4 June 2025, it will be minimal due to the proposed increase on the General Fuel Levy.”
A Balancing Act for the Treasury
While the government frames the levy increase as a necessary fiscal measure in light of mounting public debt and infrastructure funding needs, critics argue that it places a disproportionate strain on lower- and middle-income South Africans, who are already grappling with high food prices, rising interest rates, and sluggish economic growth.
As Budget 3.0 moves through the approval process, all eyes will be on Parliament — and on the pumps. For many, the real impact will be felt not in the corridors of power, but in their monthly budgets and bottom lines.
