WINDHOEK – Two consecutive and substantial fuel price decreases in December 2018 and January 2019, combined with stable prices confirmed by the Ministry of Mines and Energy for February 2019, bring relief to not only motorists, but to all businesses and consumers at a time when the economy is still not gaining much momentum.
This is according to a local economist, Klaus Schade, who noted that in particular the fishing and transport sectors will benefit from more stable fuel prices since fuel accounts for some 29 percent and 24 percent respectively of their total input costs.
However, fuel prices for February 2019 are still 3.7 percent (petrol) and 12 percent (diesel) higher than in February 2018.
“Transport inflation was the main driver of the inflation rate in 2018. After double-digit inflation rates for transport from September 2018 to December 2018, we can expect a return to single-digit transport inflation for January and February 2019, which will ease overall inflationary pressure. Fuel prices (operation of personal transport equipment) contribute nine percent to the overall inflation rate and have, therefore, an impact on the overall inflation rate. As said before, new technologies such as e-vehicles, can reduce the dependency on oil and hence on imports and increase the demand for locally available resources, such as renewable energies. Namibia needs to start laying the foundation for the necessary shift, even if stable fuel prices might reduce the immediate pressure to embark on the transition,” Schade cautioned.
The Ministry of Mines and Energy last week announced that fuel prices will remain unchanged with effect from 6 February 2019 midnight. The 95 Octane Unleaded Petrol is still N$12.05 per litre and Diesel 50ppm N$13.13 per litre at Walvis Bay and N$12.47 and N$13.56, respectively, in Windhoek.
Average monthly Brent Spot Oil prices increased by 2.9 percent from an average of US$57.36 per barrel in December 2018 to US$59.04 per litre up to 28 Jan 2019.
The Namibia dollar meanwhile depreciated by 2.1 percent on average in January 2019 (N$13.89 per USD) compared to December 2018 (N$14.18 per USD). However, the NAD has depreciated against the USD by 13.8 percent compared to January 2018.
“The slowdown in the global economy suggests that the demand for oil will remain suppressed. Unless OPEC and Russia agree on substantial production cuts that cannot be compensated by production increases by non-OPEC member states, in particular shale oil producers in the USA and Canada, the weak demand will prevent upward price pressure on oil. Despite output cuts agreed upon between OPEC (Saudi Arabia) and Russia in 2018, Russia reportedly produced a record output in 2018,” Schade noted.
The Namibia dollar has hold ground against major currencies so far this year. Some political risks could emanate from the national elections in South Africa in May 2019. “If the South African rand / NAD can hold its current position, we might see some fluctuations in the fuel price, but not to the extent experienced in 2018.”
2019-02-04 10:56:52 2 months ago