Nene: Govt Depts Will Also Feel Pinch of Fuel Hike

Nene recession
Finance Minister Nhlanhla Nene. Credit: GCIS.

With another petrol price hike looming in August, the Finance Minister says that government departments will also feel the pinch.

In a written parliamentary reply, Nhlanhla Nene says that between 2013 and 2017, spending on fuel by government departments has continued to grow faster than inflation.

The government could also find itself raking in less revenue if less petrol is sold.

Motorists have been paying between 23 and 26 cents more for a litre of petrol since the beginning of July.

The Minister of Finance says that the price of petrol has the greatest impact on government departments whose service delivery mandates involve significant car travel.

These include Police, the Independent Police Investigative Directorate, Health, Correctional Services and Defence and Military Veterans.

In response to a question from the Economic Freedom Fighters, Nene says these departments do not receive additional funding when petrol prices rise, and they must absorb the spending pressures within their existing budgets.

Because the general fuel levy and the Road Accident Fund levy are fixed annually per litre of petrol, the fuel prices do not have a direct impact.

But Nene has warned that government could rake in less revenue in 2018 if less fuel is sold as a result of the price hikes.

The Automobile Association is predicting a further 19 cents per litre petrol price hike going into August.

EWN