The Road Accident Fund was given a temporary lifeline with Finance Minister Nhlanhla Nene’s announcement of a 50c hike in the fuel levy, it said on Wednesday.

“This raises the compensation scheme’s primary source of income from 104c to 154c per litre of fuel sold, a percentage increase of 48 percent, which roughly generates a total fuel levy of R2.66 billion per month for RAF’s coffers from July 2015,” the RAF said in a statement.

At 104c the RAF generated revenue of R21bn per year.

“An extra 50c will equate to an additional annual amount of R10bn, bringing annual revenue to R31bn,” it said.

Earlier Nene, in his first budget speech as finance minister, announced that fuel taxes would increase by R80.5c/litre — the general fuel levy by 30.5c/litre, and the RAF levy by 50c/litre, both effective from April 1.

“It is required in order to finance the progress made by the RAF administration in clearing the claims backlog. But it also reflects the unsustainability of the current compensation system, which has accumulated a R98bn unfunded liability,” Nene said.

The RAF said motorists’ additional contribution towards the fuel levy guaranteed that road users would still get cover under the current compensation scheme.

RAF chief executive Eugene Watson said although the extra money would help, it would not solve all its “legacy problems”.

“Initially, the extra fuel levy will not speed up claims payments. If we continue to maintain our high productivity levels, receive no further increases from the fuel levy, and delay the implementation of the Road Accident Benefit Scheme, our backlog will simply continue to grow,” he said. SAPA