South Africa petrol prices may drop 22% under levy plan

Finance Minister Enoch Godongwana has called for a phased removal of the general fuel levy and the Road Accident Fund (RAF) levy. His comments came as inland 95-octane petrol reached R30.25 per litre in October 2026, compared with R29.38 at the coast, according to BusinessTech reporting published on 7 October 2026.

Together, the two levies add R6.35 per litre to the pump price. The general fuel levy stands at R4.10 per litre under the 2026 Budget Review; the RAF levy adds R2.25. Including the R0.19 carbon tax, the combined charge reaches R6.54 per litre — about 21.6% of the current inland price.

The general fuel levy alone raises approximately R80bn per year for the fiscus, Godongwana said, according to Automobile Association reporting published on 28 October 2026. Removing both levies would widen that gap considerably unless the government identifies replacement revenues or reduces spending.

What would the levy changes mean for fuel costs?

The proposal gives the market a clear trade-off. Consumers and freight operators would gain immediate price relief. However, the Treasury would face a structural shortfall that requires a credible fiscal response.

As a result, sovereign investors will watch the government’s replacement-revenue plan closely. A levy cut without offsetting measures would pressure South Africa’s already constrained budget position.

Godongwana also called for a new insurance model to replace RAF financing. Under the current system, road-injury compensation is funded directly through petrol consumption. Separating the two would form a core element of any reform package.

Short-term relief already announced

The government has moved ahead with temporary measures. The general fuel levy will drop by R1.50 per litre for petrol between 4 November and 1 December 2026, per BusinessTech reporting published on 21 October 2026. From 1 December 2026 to 5 January 2027, the reduction narrows to R1.00 per litre, according to Automobile Association figures published on 28 October 2026.

These short-term cuts signal political willingness to act. They do not, however, resolve the structural question of permanent levy removal.

The Automobile Association welcomed Godongwana’s proposal and called a phase-out long overdue. It also urged a public review of the basic fuel price formula — a step that would improve pricing transparency for market participants.

By FurtherAfrica’s reading of the numbers, the proposal shifts value from the state to households and transport users. Lower pump prices would moderate transport inflation and improve operating margins for fuel-intensive businesses such as freight and retail.

The key signal for investors is fiscal design: the policy’s investment value depends entirely on how officials replace the lost revenue and restructure RAF financing. Watch the next budget cycle for a permanent timetable and replacement revenue measures.

Quick answers