South Africa cuts fuel tax as pressure mounts in Ghana to scrap GH¢1 levy amid global oil price surge

South Africa has announced a temporary reduction in its fuel levy for April to ease pressure from rising global oil prices, a move expected to cost the government about $351 million in lost revenue.

The government said it would cut the general fuel levy by three (3) rand, about $0.16, per litre for both petrol and diesel, following mounting pressure from labour unions and business groups.

Despite the intervention, fuel prices are still projected to rise sharply. Petrol prices are expected to increase by about 15% in April, while wholesale diesel prices could surge by as much as 40%, reflecting the scale of global energy shocks.

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Finance Minister Enoch Godongwana indicated that the relief would be temporary and may not extend beyond June.

“I will temporarily be lowering the fuel levy for this month of April by three rand, and then I am still discussing what we can do for the next two months,” he said.

Authorities have warned that the measure is not sustainable in the long term, with plans to recover lost revenue through other fiscal adjustments while exploring broader support for households and key sectors.

The move echoes a similar intervention in 2022, when South Africa reduced fuel levies after oil prices spiked following the Russia-Ukraine war.

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Global oil prices have surged again in recent weeks amid tensions involving the United States, Israel, and Iran, as well as disruptions to shipping routes through the Strait of Hormuz. The weakening South African rand has further compounded domestic fuel costs.

The development comes as Ghanaians call for the removal of the GH¢1 per litre Energy Sector Shortfall and Debt Repayment Levy introduced in July 2025.

The Minority in Parliament has urged the government of John Dramani Mahama to scrap the levy, arguing that it is worsening the cost-of-living burden.

Deputy Ranking Member of Parliament’s Energy Committee, Collins Adomako Mensah, said the tax is no longer justified.

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“The justification for this levy no longer exists. Keeping it is not policy, it is punishment,” he stated, calling for the repeal of the Energy Sector Levy Amendment Act, 2025.

Scrapping the levy could cost Ghana about GH¢5.7 billion annually.

President Mahama has, however, indicated that the government is exploring measures to cushion consumers. Speaking during a presidential dialogue with civil society organisations, he said authorities are reviewing pricing margins and considering supply options, including engagement with Nigeria’s Dangote Refinery.

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He added that the Tema Oil Refinery is gradually resuming operations, which could help stabilise supply and reduce the impact of global price increases.