Finance Minister Enoch Godongwana has confirmed the first increase to the fuel levy in three years, starting on 4 June 2025.
Enoch Godongwana announces first fuel levy increase in three years
This change will raise the cost of petrol by 16 cents per litre and diesel by 15 cents per litre.
The fuel levy is a government tax included in every litre of fuel purchased. It helps fund public spending but also affects what motorists pay at the pump.
Godongwana announced the increase during his third budget speech, stating:
“This budget proposes an inflation-linked increase to the general fuel levy. For the 2025/26 fiscal year, this is the only new tax proposal that I am announcing”
The Automobile Association (AA) responded with concern.
In its statement, the AA said:
“This levy adjustment comes at a time when South Africans are already contending with high food prices, elevated interest rates, increased electricity tariffs and persistently high unemployment.”
The AA warned that the increase will push up transport and operating costs across the economy. Lower-income households, who spend more of their income on transport, will be hardest hit.
The fuel levy forms part of the total tax burden on fuel. The AA explained that with this increase, the combined cost of the general fuel levy and the Road Accident Fund levy will now be more than R6.00 per litre in some areas.
This means over 30% of what consumers pay at the pump is due to these taxes.
How this affects June 2025 petrol prices
This announcement comes a day after new data showed that June 2025 petrol prices were tracking for a small decrease.
The Central Energy Fund’s (CEF) figures indicate a weak over-recovery—only about 9 cents per litre for petrol. An over-recovery means that fuel is costing slightly less on the international market than what consumers are currently paying in South Africa.
In simple terms, there was a small chance that fuel prices might drop slightly in June.
However, the newly announced levy may cancel out any savings from that over-recovery.
With the fuel levy increasing by 16 cents per litre, and the over-recovery at just 9 cents, this could result in a net increase in petrol prices rather than the hoped-for decrease.
The data also showed that diesel and illuminating paraffin were in stronger over-recovery positions—around 27 cents per litre—meaning prices for those fuels could still decrease in June, but likely not as much as previously forecasted.
Global oil prices and the exchange rate have also played a role in limiting expected price drops.
Brent crude is trading higher than last week, which raises the cost of importing fuel, while the rand has remained fairly stable but not strong enough to fully balance out the oil price hike.
The AA concluded its statement by urging government to ensure transparency in how the fuel levies are used, calling the continued reliance on fuel levies to cover budget gaps “unsustainable.”
