By Mbatjiua Ngavirue WINDHOEK Most motorists have stopped trying to comprehend the vagaries of the yo-yoing Namibian fuel prices, and accepted being at the receiving end of the oil industry as one of the inevitabilities of life, along with death and taxes. Most people accept that local fuel prices have to rise when the international fuel price rises. They however seem to find it less easy to understand why prices first go up, then down, then up again, only to go down again in a never-ending and confusing vicious cycle. Paradoxically, the higher the producer-price at the oil well the higher the profits of the refineries and distributors. The only explanation ever given is some occasional mumbo-jumbo about over- and under-recovery that is incomprehensible to the average Namibian. Some consumers feel they would prefer the certainty of a slightly higher, but more stable, price than the unpredictability of Namibia’s yo-yoing prices. As far back as anyone can remember, diesel – the primary fuel used in commerce, industry and agriculture – always cost less than petrol. The reason the oil industry gave for the lower price of diesel was that it was cheaper to refine because the refining process was much simpler. Then around August last year – for reasons that were never explained – the price of diesel shot past the price of both lead replacement and unleaded petrol. Namibian officials did not explain why they had suddenly turned pricing policy on its head, and baffled consumers were left simply scratching their heads. Based on the promise of expected savings in fuel costs, buyers of diesel cars normally pay a considerable premium over the price paid for petrol models. Diesel car owners therefore felt cheated, their pricey diesel cars having suddenly turned into millstones round their necks. At the end of last month, the Ministry of Mines and Energy restored normality by once again reducing the price of diesel to below the price of petrol. The unwelcome August price increase however prompted leader of the Congress of Democrats, Ben Ulenga – also the owner of an oil-burner – to ask questions in Parliament. Fortunately for Minister of Mines of Energy Erkki Nghimtina, he could now refute Ulenga’s allegation of being biased against diesel because he is not a farmer, when answering the opposition leader’s questions in Parliament last Thursday. He could happily announce that diesel had become cheaper than petrol, selling at N$6,32. Actual pump prices in Windhoek are N$6,57 for diesel, N$6,80 for lead replacement petrol and N$6,82 for unleaded petrol. Nghimtina confirmed that between 2002 and 2006 fuel prices in Namibia went up 15 times, while eight decreases were recorded. Unleaded petrol went up 39 percent, lead replacement petrol 41 percent and diesel 44 percent. He said during the five-year period the industry was severely affected by fuel price instabilities brought about by external factors such as geopolitical tensions. Other factors that played a part were exchange rate fluctuations and demand and supply trends in the international market. More worryingly he announced that the National Energy Fund (NEF) is now massively in the red, with a huge negative balance due to subsidising fuel prices. The negative balance in the account is an astronomical N$300 million, for the first time in Namibian history. This seems to call into question the ministry’s management of the NEF, which is supposed to act as a stabilisation fund and not as a subsidisation fund. Namcor Public Relations Officer, Katrina Sikeni, also explained some of the reasons behind the long-term trend of increasing diesel prices. She said global demand for diesel had increased steadily during the past few years. The fuel efficient characteristic of diesel, accompanied by improvements in technology of diesel-driven vehicles, had resulted in the significant increase in the number of motorists using diesel vehicles. In some countries governments are even giving incentives to motorists to use diesel-driven vehicles instead of gasoline driven vehicles. During the past few years, many countries had started to use cleaner fuels, as a result of new environmental policies. “This means that refineries had to start producing cleaner fuels to meet the new requirements. “In the case of diesel, the sulphur contents in the diesel had to be reduced drastically, meaning that there is a cost implication when producing cleaner diesel,” she said. The current acceptable sulphur level in diesel is 500 parts per million (ppm), down from 3000 ppm. It is more expensive to produce diesel with lower sulphur levels because a more intensive process of desulphurisation is required to meet the current specifications.