By: Nghiinomenwa Erastus/ Kelvin Chiringa
After a temporary respite in January, Tom Alweendo and his team are back this time to tell all motorists, consumers, and fuel-driven industries to prepare extra cents per litre come 2 February 2021.
This is after the per barrel price for crude oil in the international market increased by more than US$10 for the past four weeks.
In a statement released yesterday, the ministry explained that these increases have unfortunately led to a hike in the import parity price of petroleum products at the Namibian shore.
As a result, the ministry has decided to pass on the fuel price increase burden to consumers through a 30 cents increase for petrol and 40 cents for diesel effective from 02 February 2021.
The ministry has covered the price differences (under-recovery) for January 2021 to the tune of N$67 million.
University of Namibia economist, OmuMatundu has said, “We are in for a rough ride as consumers because the ministry usually increases prices when there is an under-recovery, and I think that is happening.”
“Worse with international oil prices not coming down and on the other hand, the Rand has now started to lose value. That is the pressure and reason why the ministry is increasing fuel prices.
“But as for consumers, if you look at food inflation, for instance, the way prices have been behaving, and then you add to that transport, driven by the increase in fuel prices, consumers will be in big trouble,” he said.
The trouble for Namibian consumers and motorists is expected to worsen as forecasts from analysts around the world are that the per barrel price might reach US$100 if nothing major happens.
This is despite the USA increasing supply from its reserves.
The ministry of mines energy highlighted that the average price for Unleaded Petrol 95 throughout January 2022 is US$95,142 per barrel (compared to US$86,33 per barrel for December 2021).
This is an increase of almost US$10 per barrel in the space of only four weeks.
Furthermore, the average price for Diesel 50ppm over the course of January 2022 is US$96,107 per barrel (compared to US$84,073per barrel/ for December 2021.
Despite a stronger Namibian dollar it was, however, outweighed by the increases in the cost per barrel and the costs of shipping petroleum products, which pushed upwards as per the calculations by the ministry.
This resulted in under-recoveries on both products, 62 cents per litre on petrol and 90 cents per litre on diesel.
Situated next to one of Africa biggest oil producers, Namibia goes as far as Asia to get fuel and arrest anyone who tries to buy fuel in Angola.
Through Alweendo and his team, the government also highlighted in the statement that they are fully aware of the inflationary pressure that fuel price increases put on prices of other goods and services in the economy.
Nevertheless, “under these difficult circumstances that are only partially within the control of the Ministry, the public is informed that the best decision possible has been taken,” the ministry wrote.
The latest inflation figures highlighted that transport-related components are pushing up prices in the country.
With a 14% increase in most of the transport components, in all subgroups except air transportation, a deflation of 10,7% was recorded.
Under transportation, the operation of personal transport equipment is leading, with prices increasing by 19,7% in December 2021, compared to a deflation of 4,9% recorded in December 2020
Mines ministry spokesperson Andreas Simon said, “It is indeed a sad reality, but it is something outside the control of the government. Many of the factors that contributed to us having to increase fuel are basically what we will have to consider as external factors.
“First, we need to understand that we import fuel. We are a net importer, and when I am saying that, I am referring to petroleum products being diesel and petrol. The countries producing these products (OPEC) have decided to keep the oil supply low.
“They have seen that it is also costly for them to produce fuel given the pandemic issue globally. Countries are going on lockdowns. There are fewer people on the roads. And you have seen that the Covid situation is also causing logistic delays.”
The Namibia Statistics Agency explained that the increase in transport component for December 2021 resulted mainly from price increases recorded in petrol/diesel, which recorded an increase of 36,1% in December 202.
While prices of vehicles increased by 6% during the same period last year- the increase was witnessed in the price levels increase of all sub-groups, Motorcycles at (10,9 per cent), bicycles at (8,4%) and motor cars at 5,8%.
The increase in cost was not only limited to those who own cars, but prices for public transportation services also recorded an increase of 8,9% compared to 0,7% registered in December 2020.
Economist lawmaker Nico Smit said, ‘This increase in fuel prices is just getting to be too much. I do not know why we have this huge fuel storage facility. That thing was built to stabilize the prices.
“To buy in bulk when fuel is cheap and then to keep the prices lower when the prices go up, they can use that fuel and buy again when the price is low. But it seems to be the opposite is happening. As I said last time, it’s going to have a chain reaction again. N$0.30 and N$0.40 prices for diesel and petrol litre is a considerable amount of money, and transport costs will be sky-high,” he said.
