The mines and energy ministry has decided to provide some relief to motorists during October by decreasing diesel pump prices countrywide by 40 cents per litre as of next Wednesday, 07 October, 2020. Petrol pump prices will however remain unchanged.
The means new diesel pump prices at the port of entry in Walvis Bay will become N$11.58 cents per litre and petrol price will remain at N$11.65. A major factor for the ministry’s decision was the international price decline of the refined petroleum products. The average international price for refined petrol was US$48.38 per barrel compared in August to US$46.99 in September 2020; while that of refined diesel was US$48.45 per barrel in August compared to US$42.79 in September.
During the same time, the exchange rate between the Namibia Dollar against the US Dollar strengthened. The local currency appreciated, on average, from N$17.22 in August to N$1 6.62 in September. Moreover, freight has slightly increased during the period under review as the cost of shipping product was 91% above flat freight rates in September compared to 74% in August.
In a statement, the ministry’s spokesperson, Andreas Simon, noted that fuel pump prices locally are influenced by a host of factors, but stated that during September only a few of these played out. These included the international price of refined oil, the exchange rate between the Namibia Dollar against the US Dollar, and the cost of shipping petroleum products from the international market to Namibia (freight).
“The objective of the review exercise is to ensure that the fuel pump price is, at all times, reflective of the import price and to do so in an orderly manner. The review can either reveal an under-recovery, indicating that the pump price was lower than the import price; or an over-recovery, indicating that the pump price was higher than the import price. An under-recovery is ordinarily passed onto the consumer or alternatively it is defrayed from the National Energy Fund (NEF),” Simon explained.
He added that during September a combination of over-recovery and under-recovery was recorded. An under-recovery of 3.854 cents/litre was recorded on petrol while 50ppm diesel recorded an over-recovery of 62.600 cents/litre. This was an improvement compared to August when only under-recoveries were recorded.
For us to continue to soften the burden on the consumers and at the same time to ensure the sustainability of the NEF, it has been decided to decrease the diesel pump prices countrywide by 40 c/l as of OOHOI on Wednesday, 7th of October, 2020. Petrol pump prices will remain unchanged in October.