By: Justicia Shipena
The mines and energy ministry has at long last given in to the pressing demands of the Fuel and Franchise Association of Namibia (FAFA) by increasing the dealer margin by 50 cents on every liter of fuel, expressing that the government ‘finally’ listened to their cry.
The increase has thus pushed the revenue dealers get from 113 cents per litre to 163 cents per litre.
The changes will become effective as of the 3rd of August 2022.
The decision also comes in the wake of strike action which the dealers threatened to unleash upon the economy if their demands were not met.
In a series of meetings with government, Tom Alweendo, has insisted that yielding to the dealer’s demands would force another fuel hike for the month of August and thus needed more time to study the global price trends before giving in.
Speaking to The Villager on Friday, FAFA chairman, Hendrik Krüger, has described it as a ‘small’ step in the right direction, adding that the move would assist retailers in the interim.
“So, the ministry has answered our pleas, which is one small step in the right direction. We will continue with discussions moving forward to see how we will solve all issues. But yes we are pleased, and at least at the moment, our ministry heard our cries, and they have listened to and assisted us,” he said.
Krüger said several issues still needed to be addressed in the sector, one of which being a proposal to conduct a survey to determine the cost drivers that affect dealers’ sustainability and profitability.
He submitted that FAFA wants to agree on a methodology where “we consider specific strong costs like electricity, bank costs and rents”.
FAFA was concerned about a low gross profit margin of 5 per cent, which, according to them, was getting smaller as new players entered the market.
At that time, some service station owners said they faced insolvency and growing debt issues as they had to cover all overheads from this small margin.
This included salaries, rental fees and bank charges incurred per every transaction using a debit card.
The ministry’s spokesperson, Andreas Simon said, “The ministry decided to look at the plea of the retailers by saying maybe we should increase the margin just to give them that relief, and that is what we have decided to do,” Simon added.
At the back of this the ministry has also resolved to extend the temporary reduction of levies imposed on fuel.
The fuel tax will now be reinstated back to 90 cents per litre.
This entails that the MVA levy, road user charge levy and the Namcor levy will remain at their current levels until further notice.
In May this year, cabinet approved the mines and energy ministry’s recommendation to reduce levies by 50 per cent for three months temporarily.
The levies that were reduced include road user charges (from 148 to 74 cents per litre), fuel levy (from 90 to 45 cents per litre), Namcor levy (from 7.6 to 3.8 cents per litre) and the MVA Fund levy by 25% (from 50.3 to 37.725 cents per litre).
