Unfavourable international exchange rates coupled with volatile global oil prices will see Namibians paying 50 cents a litre more for both petrol and diesel as of Wednesday, 3 February. This means the new fuel prices at Walvis Bay will become N$11.85 per litre for petrol and N$11.88 per litre for diesel while prices across the rest of the country will be adjusted accordingly.
The Ministry of Mines and Energy confirmed the prices increase late last week, stating that Namibia is finding herself in a very volatile international oil market at present and that the exchange rate has not been favourable during the course of January 2021. The Namibia Dollar traded at about N$15.09 per US Dollar compared to about N$14.85 throughout December 2020.
Meanwhile, the prices of petrol and diesel across the international product market have also gone up significantly, owing mainly to supply cuts by OPEC’s biggest producer. From last month, the barrel price of petrol increased from roughly US$52.74 to about US$59.18 while that of diesel increased from about US$54.47 to about US$58.85.
“Specifically, the current review has an under-recovery of about 102 cents on petrol and about 105 cents on diesel. In addition to these under-recoveries, the ministry resolved to adjust the dealer margin on all products for the service station operators by 3 cents per litre from 110 cents per litre to 113 cents per litre,” read a mines ministry statement.
“This adjustment is in line with the general inflation rate for 2020 of about 2.2% in accordance with data sourced from the Bank of Namibia. Due to these under-recoveries and the need for an adjustment of the dealer margin, the ministry has, thus, resolved to increase the price of petrol by 50 cents per litre and that of diesel by 50 cents per litre for the month of February 2021,” the statement added.
Mines ministry spokesperson, Andreas Simon, in the statement further noted that the last review also had under-recoveries and although those were moderate in comparison to the current figures, the ministry resolved at that time not to increase fuel prices considering that seasonal farming activities in most of the country were just kicking-off and a lot of traveling from various holiday destinations was taking place.
“The ministry can, however, not afford to continue running under-recoveries indefinitely. Thus, a partial upwards adjustment in fuel pump prices is warranted to avoid passing on the full burden to consumers at the pumps. Moving forward, the ministry will closely monitor market developments in efforts to devise the best possible fuel pricing interventions,” Simon concluded.