Petrol, diesel prices to increase by 40 cents in July
Motorists will have to fork out an extra 40 cents for petrol and diesel as prices for the commodity will increase, effective from 7 July, the Ministry of Mines and Energy announced.
The fuel pump prices will become N$13.55 per litre for petrol and N$13.58 per litre for diesel. The ministry made the decision to ensure that the current level of the basic fuel price is properly aligned with the actual import parity price of petroleum products following an under-recovery of 66 cents on petrol and an under-recovery of 55 cents on diesel in June.
The National Energy Fund will cover the entirety of the under-recoveries recorded for the month of June 2021 on the behalf of fuel consumers through the equalization levy.
Spokesperson of the ministry, Andreas Simon said oil production discipline among the OPEC members and other major oil producers on the supply side coupled with a positive outlook on the demand side have ensured an upward trajectory in the prices of crude oil.
A case in point is that the Russian Federation has been insisting on raising output further to avoid an increase in prices, but key OPEC producers, such as Saudi Arabia, have not yet given any clear signals on the next steps to be taken. There is also a growing consensus in the oil market that the movements in oil prices are more inclined towards the upside as the global economy recovers from the COVID- 19 pandemic.
“Stricter global environmental regulations aimed at curbing carbon emissions are also putting more pressure on oil investors and pushing the oil prices upwards in the process,” Simon said.
Amid all the oil market uncertainties, the exchange rate has recorded yet another appreciation of the Namibia Dollar against the USD at roughly N$13.8049 per USD during the month of June 2021 versus the average exchange rate for May 2021 at N$ 14.0426 per USD.
A currency appreciation usually reduces the under-recovery level and increases the over-recovery level in the final basic fuel price calculations.
During June 2021, the per barrel prices of petrol and diesel across the international product market have sharply increased from about USD76.68 to about USD79.75 and from about USD73.14 to 77.67, respectively. An increase in international barrel prices usually increases the under-recovery level and reduces the over-recovery level in the final basic fuel price calculations.