By: Nghiinomenwa-vali Erastus
The National Energy Fund (NEF) has spent more than N$3.4 billion on stabilising fuel prices in the country between 2015 and 2022, while it collected around N$3.1 billion through fuel equalisation levy.
This money is a payment of money owed to the suppliers of petroleum products (under-recoveries) due to the differences in prices at the local pump and in the international markets as the country is a net importer of refined petroleum products.
During a presentation at Ongwediva by the Acting Director for the Energy Fund, Anna Libana said the NEF allocated funds are channelled to the fuel suppliers, to avoid them passing on the differences between local prices and international fuel prices to consumers or the Ministry of Mines and Energy to cover a certain portion of the fuel price increase.
Thus, in certain months there are no fuel price increases despite under-recoveries, that is low local pump prices compared to international prices.
The fuel equalisation levy is currently set at 0.671 cents on petroleum and 0.411 cents on diesel.
Under recovery payment values have been fluctuating since 2015, but have been increasing in most years, highlighting the volatility of the oil market and the country’s lack of influence beyond the local pump
The lowest payment to fuel importers was N$163,4 million in 2015, . After that, it has been above N$245 million.
It, however, jumped to more than N$568,8 million in 2018, which was the second highest paid in the period under consideration.
After more than half a billion was paid to suppliers to equalise prices in 2018, it slowed down to below N$300 million in 2019.
After reducing, the payment shot up again in 2020, as the NEF tried to shield the local market from the oil volatilities, with the NEF ended up paying N$545 million to equalise prices.
The highest under-recovery payment by the NEF during the period came in 2021 as the global economy was gradually recovering from global localdown of Covid-19.
For that particular year, the NEF channelled N$1.1 billion to oil suppliers to equalise prices and prevent the whole fuel prices from being channelled to consumers in the local economy.
The oil prices took a back step in 2022, which led to the NEF not using much of its collection to pay for under-recovery. Thus, for 2022 only N$261.9 million was paid to fuel suppliers.
Given that internally the country has no control of crude supplies at the internal level nor refining capacity to supply itself- it charges fuel consumers the fuel levy that is used to cushion them from the international oil volatility.
Early this year the country was informed of the Angolan gesture, offering Namibia equity on the construction Lobito Refinery.
A delegation from the Ministry of Mines and Energy visited Angola to discuss the Lobito Refinery project and submitted a report to Cabinet, but no decision has been made if the Namibia will buy in equity or not.
The NEF collects the duty of the fuel levy and others and also manages the slate account, which determines the under/over-recovery caused by changes in controlled petroleum product prices.
A slate levy is applicable on fuels to finance the balance in the slate account when the slate is in a negative balance.
The NEF also collects levies on behalf of the Motor Vehicle Accident Fund (MVAF) and National Road Safety Secretariat and remits them to the respective beneficiaries after 45 days of sales.
This also includes receipts of money collected by Nampower in terms of electricity levy. Email: erastus@thevillager.com.na
