Cabinet still to decide on fuel price relief measures extension as RFA, MVA bleed

Cabinet is yet to decide on whether to extend or remove the fuel price relief measures introduced in May, The Brief can reveal.

The temporary relief measures are expected to lapse at the end of this month. 

 “The Ministry has submitted a submission to Cabinet seeking for approval or an opinion on whether the levy amnesty can be maintained and extended for another 3 month or to reduce it further if the situation worsens,” Ministry of Mines and Energy Spokesperson, Andreas Simon, told The Brief. 

“We are studying the situation of the fuel volatility and whether it will go down, maintain or increase. That will then determine our stand; however, we are still waiting for the response from the Cabinet.”

The Energy ministry announced a reduction in petrol prices by N$1.20 for May and diesel prices by 30 cents, while at the same time introducing temporarily reduced levies on all petroleum products, through the reduction of the NAMCOR Levy, road user charges and fuel tax by 50%, while the MVA Levy was reduced by 25%.

According to Road Fund Administration Chief Executive Officer, Ali Iipinge, companies will endure extreme financial losses, which will eventually be extended to the end user who will get a de-service even though they benefit from reduced fuel price.

“The effects of such a drastic measure will mostly be felt by the motorist who will be driving on bad roads, hence the vehicle operating cost will be much higher, even though they are benefiting in terms of reduced fuel price,” said Iipinge. 

He said the company has lost revenue in excess of N$300 million as a result of reduced levy and will be forced to terminate maintenance contracts because there will be no more to pay these contractors. 

“The extension or reduction of the levies will further erode our finances and thus affect our ability to maintain roads. When that does not happen, it means motorists will be driving on bad roads,” Iipinge said.

MVA CEO Rosalia Martin-Hausiku said a further extension of the reductions of its levy will be detrimental to the Fund’s capability to deliver care to its clients. 

“We started feeling the effects of the current 25% cuts in July and it’s translating into N$ 11 million per month as initially predicted. Further, an Operating Deficit aggregating to N$10 million will be recorded on 31 December 2022.Cash withdrawal from existing investment of $110 million inclusive payments towards the ERP system which is a critical mission, as the current system is unable to deliver business expectations,” explained the CEO as she explained the fund’s cash flow forecast if the 25% cut on fuel levy is extended to December 2022.

Martin-Hausiku said the cash flow forecast was prepared based on committed costs and didn’t factor in emergency costs. 

Namibia’s fuel levies were reduced by the Ministry of Mines and Energy in consultation with the stakeholders in order to make fuel a bit affordable for road users as prices continue to spike due to market volatility. 

Road Charge User was reduced by 148 to 74 cents, fuel levy from 90 to 45 cents, NAMCOR 7.6 to 3.8 cents, thus accounting for a 50%, respectively, while MVA was reduced by 25% from 47.7 to 37.725 cents.

 

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