The first fuel increase for 2020, which came into effect this week Wednesday, was necessitated by an under-recovery of N$2 per litre on petrol and N$1.64 on diesel. 

This is according to the Ministry of Mines and Energy (MME) which explained in a recent statement that the situation came about due to fuel being bought at a higher cost than the local set price for landing, which is also known as the basic fuel price (BFP). This week local petrol prices increased by N$1 per litre and diesel went up by 70 cents a litre. 

“This means that the prices for fuel have gone up causing fuel prices for August to increase,” stated ministry spokesperson, Andreas Simon. 
 Simon explained that for the initial N$2.00, which the consumer had to pay for petrol, the MME only carried over N$1.00 to the consumer of which the remaining N$1.00 was paid by the National Energy Fund (NEF). In addition, on the N$1.64 for diesel, the ministry decided to carry only 70 cents over to the consumer while the amount of 94 cents was covered by the NEF. 

Said Simon: “This decision was taken in order to equalise the price for fuel by allowing the consumer to carry some of the costs.”
The ministry further noted that since June 2019 there were some under-recoveries and those losses were taken up by the NEF and were never carried over to the consumer, which is why fuel was not increased during this time. However, MME has have emphasised that such a practice is not healthy nor sustainable for the National Energy Fund.

According to the latest statement from the MME, fuel prices for August had to be increased to ensure security of supply. 
“Usually, it is realised by making sure that our local fuel prices are reflective with the international market. Meaning, local fuel prices must be kept close to international prices because it helps the importer(s) to negotiate for better prices as the BFP is the benchmark for one to reach a meaningful price,” Simon said. 

Simon added that because Namibia is emerging from a countrywide lockdown imposed due to Covid-19, there are now more vehicles on the roads which in turn has increased demand for fuel. He noted: “Where there is demand, prices should be expected to go up meaningfully, while considering the current economic condition of the country.”  
 Simon concluded that the MME reviews fuel prices every month taking into account the need to ensure the orderly importation of fuel products into the country.www