The Ministry of Mines and Energy has warned Namibians to brace for more fuel price hikes in the coming months after it has announced a N$1.50 increase in the price of petrol, while diesel remained unchanged for the month of March.
The March price hike will bring the Walvis Bay petrol price to N$19.78 per litre, while diesel prices will remain at N$20.65 per litre.
The increase for petrol could have been as high as N$1.87. While diesel could have increased by N$0.30, increases which the government through the National Energy Fund (NEF) is set to absorb the under-recoveries on behalf of fuel consumers.
“Initially, the Ministry was supposed to pass over the entire under-recoveries to the consumer, however, we agreed as usual to take up some of those costs under the NEF. Meaning, initially, petrol prices should have gone up with N$1.87. However, the fuel review committee agreed to announce that petrol prices would only increase by N$1.50 whereby the 37 cents will be covered by the NEF,” Ministry of Mines and Energy Spokesperson Andreas Simon told The Brief.
“Remember, we also recorded under-recoveries during February, and fuel prices were never adjusted, thus the N$73 million under-recoveries for February will be paid by the NEF and going into March, the under-recoveries/losses for March, which is 37 cents on petrol and 30 cents on diesel, will still be paid/covered by the NEF and not be passed over to the consumer entirely.”
Simon cited the depreciation of the local currency against the greenback, cuts in production, amid increased demand as drivers for the price hikes.
“Another factor to consider is the depreciation of the Namibia Dollar against the U.S Dollar, i.e., this means the N$ has slightly lost value by 7 cents, it has become costlier to exchange currency to import fuel to Namibia, since fuel is bought in US$. Additionally, we have seen barrel prices increasing. Production rates went up. From 1-21 February, one barrel of Unleaded Petrol 95 (ULP95) traded at an average price of US$100.035. In addition, one barrel of Diesel 50ppm traded at an average price of US$108.040,” he said
“Remember I said this last month—this was going to happen. China just opened its borders, its economy is running at full swing, this has caused a demand for petroleum products to increase—and so producers cause a deliberate scarcity of these products by cutting production and you begin to see prices going up. As price takers, many of us are left with no choice but to take whatever prices are thrown at us.”
Local fuel prices according to Simonis Storm increased by 28.3% for petrol and 46.7% for diesel during 2022 (between January and December).
“Based on Bloomberg consensus forecasts on Brent crude and our USD/ZAR forecasts, we expect the Rand oil price to decline over 2023, which should lead to a drop in local petrol prices in return. Diesel prices however are expected to remain elevated with risks of further price hikes in 2023. With diesel being used more widely in the economy, we expect producer prices to remain relatively expensive as a result,” the research firm said in its economic outlook report.
According to the Ministry of Mines and Energy, Namibia consumes an average of 90 million litres of fuel per month, with 60 million litres being diesel and 30 million litres being petrol.
