The government has cut the pump prices of petroleum products by N$1.20 per litre for petrol and N$0.65 per litre for diesel in September following the introduction of a new pricing calculation model.
This means motorists will now pay N$21.08/l for petrol down from N$22.28/l last month while diesel prices have gone down to N$22.12/l from N$22.77/l effective Wednesday.
Mines and Energy minister Tom Alweendo said the introduction of the new freight pricing methodology comes into effect after realizing that most, if not all, petroleum products imported into Namibia are no longer emanating from South Africa, and thus the South African to Walvis Bay freight rate component in the old methodology is no longer warranted.
“After entering the above input factors into the fuel pricing model, the Ministry recorded high over-recoveries on the two respective products, namely an over-recovery of about 300 cents per litre on petrol and an over-recovery of about 100 cents per litre on diesel. These over-recoveries are mainly recorded due to a significant decrease in the oil prices per barrel,” he said.
The latest calculations by the Ministry indicate that the average price for Unleaded Petrol 95 over the period of 01-26 August 2022 is at US$111.078 per barrel (compared to US$128.161 per barrel at the end of July 2022), a huge decrease of about US$17 over the review period.
“The average price for Diesel 50ppm over the period of 01-26 August 2022 is at US$ 134.607 per barrel (compared to US$139.692 per barrel at the end of July 2022), a much lower decrease of about US$5 per barrel over the review period,” added Alweendo.
The Mines and Energy ministry recently resolved to start calculating the freight rates (shipping costs) in the Basic Fuel Price (BFP) based on the data published by REFINITIV between Walvis Bay and the three respective benchmark pricing markets, namely, Mediterranean, Arab Gulf and Singapore.
The Ministry also extended the temporary fuel price relief measures for the second time after the expiry of the initial three months until further notice.
The Ministry earlier this year 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.
Additionally, the Ministry has also resolved to increase the industry margin for fuel wholesalers by 20 cents per litre from N$1.08 cents per litre to N$1.28 cents per litre on all products effective on the 07th of September 2022.
