Old Mutual Analysis Suggests South African Treasury May Extend Fuel Levy Relief Using Mining Tax Windfall

South Africa's Treasury may use a R40bn mining tax windfall to extend petrol price relief and the R3 fuel levy cut, according to Old Mutual Investment Group.

By: AXL Media

Published: Apr 26, 2026, 11:44 AM EDT

Source: Information for this report was sourced from Daily Investor

Fiscal Flexibility Amid Elevated Energy Costs

The National Treasury of South Africa may have significantly more room to maneuver regarding petrol price relief than previously signaled by government officials. According to an analysis by Sisamkele Isipho Kobus, a senior analyst at Old Mutual Investment Group, the state can potentially afford to sustain the current R3 reduction in the General Fuel Levy. While Finance Minister Enoch Godongwana has maintained a cautious stance on the sustainability of such measures, OMIG’s data suggests that robust tax collection from the mining sector has provided a financial cushion that could protect consumers from the immediate shocks of high global oil prices.

The Economic Impact of Continued Levy Reductions

Maintaining the current fuel relief is projected to cost the South African government approximately R6 billion per month in lost revenue. If the Treasury chooses to absorb this cost for a three-month period, the total fiscal impact would reach R18 billion, a sum that Kobus asserts the state can manage without compromising its primary surplus. Beyond the direct savings for motorists at the pump, extending the cut is expected to have a cooling effect on broader economic pressures, potentially reducing the national inflation rate by 0.2 percentage points during the relief window.

Mining Sector Windfall as a Strategic Buffer

The viability of extended relief is largely supported by a conservative revenue outlook initially set by the National Treasury. Current market data indicates that corporate income tax from mining companies is likely to exceed original projections by R40 billion in the current financial year. Kobus explains that this surplus gives the government a unique choice: it can either use the funds to stabilize the national debt and invest in infrastructure, or it can redirect the windfall to maintain the R3 fuel levy cut for up to six months. Utilizing the mining overrun in this manner would likely result in a neutral impact on the state's overall budget balance.