South Africa has announced a temporary reduction in fuel tax to ease the impact of rising global oil prices linked to the ongoing conflict involving Iran, even as fuel prices rise sharply across the country.

The measure was announced on Tuesday by the government to help reduce the pressure on consumers as energy costs continue to increase.

In a joint statement, the finance and petroleum ministries said the general fuel levy would be reduced by three rand ($0.18) per litre for one month.

The government admitted that the move would come with a significant fiscal cost. Officials said the tax relief could lead to about six billion rand ($352 million) in lost revenue, although authorities plan to recover the funds through other means.

Despite the tax cut, fuel prices are still expected to increase sharply. Diesel is projected to rise by more than seven rand per litre, representing about a 40 percent increase, while petrol will increase by about 15 percent.

Paraffin, which many low-income households rely on for cooking, heating and lighting, could rise by as much as 93 percent.

The development has raised questions about how the government will manage the revenue shortfall in its budget.

Speaking to journalists, Finance Minister Enoch Godongwana admitted uncertainty about how the funds would be sourced.

“I don’t know where I’m going to find this money for now,” the minister said.

The government also said more measures are being considered to support households and key sectors affected by rising energy costs.

“Work is underway on a broader package of measures to support households and key sectors of the economy,” the statement added.