Fuel prices revised
Fuel pump prices have seen yet another increase earlier this week. According to the Ministry of Mines and Energy, the main factor behind the increase is attributed to the currently weak exchange rate between the Namibia dollar and the US dollar.
The month of June saw several fluctuations in local currency against the US dollar. These fluctuations are a result of the decreased confidence in the South African economy hence the exchange rate of the Rand to which the Namibia dollar is pegged, weakened. Mine strikes in South Africa amidst a balance of payment deficit have been viewed as the main perpetrators. Other domestic factors have also surfaced which have forced foreign investors to redirect their energies to other countries further depreciating the Rand. “Since the fuel pump pricing structure in Namibia is based on import parity, it naturally means that oil companies had to buy oil at a higher price throughout the month despite a slight decrease in the international prices per barrel of crude oil,” stated the Minister of Mines and Energy, Hon. Isak Katali.
The decrease in purchasing power of the Namibia dollar has presented a two-fold effect. Exports from the country have increased but traders are facing higher commodity prices for various imports. Oil traders have not been exempted. The result is under-recoveries above 70 cents per litre on both petrol and diesel grades.
The past month saw the National Energy Fund subsidizing over 30c/l on both grades. “Mindful of the fact that there appears to be no solution in sight to the ongoing depreciation of the local currency and the volatility of the global oil market it is likely that huge under-recoveries will be recorded in the next period,” stated the minister.
He further said that the industry margin report was successfully compiled and the results have indicated that Return on Assets in the oil industry is low. These are as a result of the daily operational costs faced by oil companies coupled with the cost of importing the oil. He stated that the ministry has decided to increase the industry margin by 6 cent per litre.
The new fuel prices have seen unleaded petrol increasing by 30 c/l and Diesel 500ppm and 50ppm increasing by 51c/l cents per litre. The new prices at Walvis Bay pumps are as follows: 93 octane lead replacement petrol at N$10.74 per litre; 95 octane unleaded petrol at N$11.26 per litre: diesel 500ppm at N$11.42 per litre and diesel 50ppm at N$11.48 per litre.