WINDHOEK – Namibian fuel pump prices will remain unchanged for February at NS13.05 per litre for 95 Octane Unleaded Petrol and N$13.63 per litre for Diesel 50ppm in part to the fixed level of global fuel inventories. In a statement released on Friday, Minister of Mines and Energy, Tom Alweendo noted that international inventories for liquid fuels remained mostly unchanged in 2019. Inventories are, however, expected to grow by 300 000 barrels per day in 2020 and then decline by 200 000 barrels per day in 2021.
“The fixed level of fuel inventories in 2019 explains to a large extent, why fuel prices remained stable and unchanging over most parts of 2019, despite the fact that the moderate under-recoveries that were recorded locally on set prices were absorbed by the National Energy Fund on behalf of local fuel consumers, costing tens of millions in monetary terms per month,” said Alweendo in his statement.
On 1 January 2020, the International Maritime Organisation (IMO) enacted Annex VI of the International Convention for the Prevention of Pollution from Ships (Marpol Convention), which lowers the maximum sulphur content of marine fuel oil used in ocean-going vessels from 3.5% of weight to 0.5%.
Furthermore, the new IMO regulations mean that freight rates, or the transportation cost of bulk fuel at sea, has increased. This has been reflected in the latest Basic Fuel Price (BFP) calculations conducted by the Ministry of Mines and Energy.
Additionally, refined oil traded at an average of about US$72 and US$77 per barrel of petrol and diesel, respectively, during January 2020, in comparison to a final average of US$72 and US$78 per barrel of petrol and diesel in December 2019, reflecting further price stability. The average exchange rate too remained relatively stable throughout January 2020 at N$14.2852 per USD in comparison with an average of N$14.3841 per USD during December 2019.
Alweendo added that his ministry has reviewed the Dealer Margin, which is the income generated by the fuel retailers, in line with the general inflation rate for 2019. This review, he explained, is conducted from time to time to ensure business sustainability in the fuel retail industry.
Said Alweendo: “The ministry has, therefore, decided to increase the Dealer Margin by 4 c/l from 106 c/l to 1 10 c/l on all the price regulated fuel products. The effective date for this adjustment is the 5th of February 2020.”
Furthermore, the National Energy Fund (NEF) will absorb under-recoveries on behalf of consumers at an estimated cost of N$20 million to the fund. Under-recoveries normally call for equivalent increases in local fuel pump prices unless these are absorbed by the NEF.