By: Nghiinomenwa-vali Erastus
MOTORISTS and other consumers of petroleum products will have to pay at least N$3.1 and N$4.1 additional for petrol and diesel following the recent decision to increase fuel prices by the government.
The price of petrol will increase by N$1.90 per liter, while diesel will go up by N$2.40, per liter, effective from Wednesday, 04 October 2023.
This is effective as of Wednesday this week.
For the two months on aggregate, motorists, industrialists, and off-the-grid farmers that are using vehicles and machinery that use petrol, from the 4th they will have to pay N$3.1 extra per liter.
For diesel consumers, the industrialists and farmers who used energy through machinery and equipment usage will have to top up N$4.1 per liter by the 4th due to September and October 2023 fuel prices.
The ministry attributed the recent increase in fuel on the assumption that there has been an under-recovery of N$1.94 on petrol prices and N$2.90 on diesel fuel products.
An under-recovery is when the domestic pump prices are unable to match the changes in domestic oil prices at the international level, thus, making it unprofitable for fuel importers and distributors.
Since fuel products are regulated commodities, the ministry, thus, intervenes to ensure under-recoveries and over-recoveries are reflective of international price changes and are adjusted to reflect the cost of importing them.
According to the ministry, this is to try to rescue them from the dire straits that they face, effective from 4 October 2023.
Furthermore, the ministry has resolved to increase the wholesaler’s retailers by 18 percent per liter from N$1.28 to 1.46 cents per liter.
The ministry reasoned that after entering the input factors in their fuel pricing model it recorded an under-recovery in the two fuel products- meaning domestic prices were not reflective of the cost of fuel.
The ministry has also offered after 3-months a temporary relief margin of 20 cents per liter to the oil dealers.
Despite this, the ministry has explained that it has covered September despite the increase for that month through the fuel equalization levy.
The Ministry explained that the circumstances at the global level present a pressing need to adjust local pump prices to reflect global changes and dynamics to ensure efficient supply security.
This is because Namibia is subject to international oil market prices and is not able to influence them.
Namibia has discovered oil on its shores, on the far south of its coastline, with various wells under appraisal for commercial viability to be determined before the end of the year.
Fuel in another region will be adjusted accordingly in line with the fuel pump at the cost as effective from the 4 October.
At the international level, new highs are continuously set with additional cuts from Russia exerting significant pressure.
This reduction in supply has also resulted in soaring crude prices which resulted in high refined commodity prices, explained the ministry.
Adding to the upward trajectory is the Libyan flood which caused various ports to standstill.
Libya is home to Africa’s largest proven oil reserves, sitting at 48 million of oil representing 39% of the continent’s total reserves.
At the time of the fuel price review, light crude oil increased nearly by 2% to a high of US$92.38 for the first time in nearly 10 months.
As for the unleaded fuel 95 petrol, it averaged at US$114.316 per barrel compared to US$110.5 an increase of 3%.
As for diesel 50PPM, it was at US$124.8 in September per barrel compared to US$118.3 per barrel at the end of August 2023.
While for those who take 10PPM, it increased by 5.3% from August to September 2023.
At the same time the exchange rate has depreciated by 0.84% against the US$18.9868 since August 2018. Email: Email: firstname.lastname@example.org