• September 23rd, 2018
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Fuel Prices - There They Go Again

By Wezi Tjaronda WINDHOEK Consumers can expect to feel the pinch of rising fuel costs that have been absorbed by the economy for some time now. The bad news is that not only will some commodity prices go up, but taxis fares as well. The Bus and Taxi Association (NABTA) said yesterday it was definite this time around - urban taxis and long-distance buses will increase their fares in the wake of the increase in fuel prices. NABTA President, Magnus Nangombe, told New Era yesterday the association will announce a hike within ten days. Those businesses affected by transport costs will also start passing on the increase to their customers. While consumers could bolster shrinking spending power by taking out loans, this, says an economist, cannot last for long - leading to declining consumer spending and a slow-down of the growth of the economy. The Ministry of Mines and Energy on Friday announced an increase in pump prices of the three controlled products - Leaded Petrol, Lead Replacement Petrol and Diesel. They will from tomorrow on cost N$5.57, N$5.59 and N$5.65 respectively at Walvis Bay. Martin Mwinga, an economist with the First National Bank, said rising fuel costs impact on the economy through higher inflation and as a direct cost to manufacturers and traders. Higher fuel prices and higher inflation in turn shrink the spending power of consumers while their salaries remain constant. Expenses for drivers go up and taxi fares increase. The Consumer Lobby said yesterday these fuel increases, caused by volatility in the oil industry, have forced low-income consumers to only buy what they really need. "An aware person would see the prices jump on all commodity prices," said Bob Zieckenopasser. Mwinga added that the rise in inflation could only be controlled by policy instruments such as the Bank of Namibia retaining or increasing the interest rate. If inflation continues to rise, the bank will increase the rate, which would then increase the cost of capital; thereby slowing spending and affecting the GDP negatively. Another effect higher interest rates will have on consumers will be a rise in the costs of home loans. "To maintain their standards of living, consumers get deeper into debt until they cannot borrow any more and this is when the drama starts - bank repossessions start, consumption expenditure contracts and the economy declines further," said the economist. As for increases in taxi and bus fares, Nangombe said the procedure was that the association can increase its members' fares within 10 days after a hike, and after that they have to apply to the Ministry of Transport and Communications to approve the hike. Nangombe could not however say by how much the fares will go up as the association was awaiting proposals from the regions. Before this is done, however, Nangombe said taxis operating in urban areas will have to start charging the agreed fare of N$6.00. Failing that; "It will be deemed that they do not need the money." Long-distance buses will also have to harmonise their fares because some routes, according to the NABTA President, are overpriced. Passengers travelling from Oshakati to Tsumeb for instance pay N$80 while those from Oshakati to Windhoek pay N$105. "This needs to be looked into." With these increases, Nangombe said people operating public transport businesses are not making profits anymore and can neither pay their workers nor maintain their vehicles, which becomes a hazard for road users. In its announcement of the fuel hikes on Friday, Permanent Secretary Joseph Ita said although Namibia wants to keep the fuel prices to the bare minimum considering its impact on the economy, it has to harmonise the prices with neighbouring countries.
2006-06-07 00:00:00 12 years ago
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