The National Treasury is seeking to allocate R10 billion to the Equalisation Fund as part of efforts to protect South Africans from sharp swings in fuel prices caused by global oil market instability.
Minister of Finance Enoch Godongwana has introduced the Second Special Appropriation Bill in Parliament, proposing the transfer of funds from the National Revenue Fund to the Central Energy Fund.
According to Godongwana, the additional funding is intended to strengthen the Equalisation Fund’s ability to soften the impact of geopolitical tensions in the Middle East, which continue to affect the cost and availability of crude oil and refined fuel products.
Equalisation Fund Designed To Stabilise Fuel Prices
The proposed allocation comes as motorists are expected to benefit from a reduction in petrol prices on Tuesday, with Treasury looking to provide further protection should fresh supply disruptions emerge in the Gulf region.
The Equalisation Fund is used to finance the purchase of crude oil and petroleum products. It also serves as a mechanism to help stabilise fuel prices for consumers during periods of significant volatility in international oil markets.
Treasury Says Fund Could Reduce Need For Future Fuel Levy Relief
Earlier this year, the government temporarily suspended the fuel levy between April and June in response to the conflict in the Middle East, easing pressure on motorists facing rising fuel costs. The levy was reinstated in July.
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Revenue generated through the general fuel levy plays a key role in supporting the Road Accident Fund.
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Godongwana said this Second Special Appropriation Bill may mean that in the future, general fuel levy relief may not be required.
