Fuel bomb hits Namibia
It’s still early days in 2022 but the fuel price has always gone up twice, with the second increase historically astronomic and shooting the year-on-year increase to 35.6% for petrol and 36.3% for diesel.
PHILLEPUS UUSIKU AND JO-MARÉ DUDDY
WINDHOEK
From tomorrow, motorists will pay N$1.20 per litre extra for petrol and N$1.30 more for diesel, the ministry of mines and energy has announced.
This is the second fuel price increase for the year, following eight increases in 2021. The ministry warned that the country might continue to experience further fuel price increments during the coming months as the market remains volatile.
According to Robert McGregor, head of research at Cirrus Capital, these increases put both petrol and diesel prices at a new all-time high in Namibia. Year-on-year, the price of petrol will increase by 35.6% and diesel by 36.3%
Despite the historic increase, prices are still substantially lower than in South Africa - around N$3.73 per litre cheaper for petrol and N$1.68 per litre cheaper for diesel, McGregor pointed out.
According to the ministry’s executive director, Simeon Negumbo, the sharp increases in petroleum products are ascribed by the mismatch between global oil supply and demand.
The Organisation of the Petroleum Exporting Countries (OPEC) had to cut its supply drastically, and is now reluctant to increase supply. In addition, geopolitical tension in oil-producing regions is also driving up fuel prices, he pointed out.
Negumbo noted that the appreciation of the Namibia dollar was not significant enough to offset the sharp increase in fuel products.
Under-recoveries of 140 cents per litre on petrol and 160 cents per litre on diesel were recorded at the end of February.
The National Energy Fund will cover all the under recoveries recorded at the end of last month on behalf of the fuel consumers, at about N$143 million, he said.
Impact
According to Simonis Storm economist Theo Klein, transport has a weight of 14.3% in the Namibian consumer price basket, used to calculate national inflation rates. This means the average household spends about 14% of its budget on transport, where fuel prices would typically form the biggest component.
“With household budgets already stretched and under pressure, we expect to see less domestic tourism activity taking place due to higher fuel costs making camping trips and inter-regional travel more expensive for locals,” he said.
Meanwhile, Danie van Wyk, head of research at IJG Securities, noted that rising fuel prices mean that a larger percentage of a consumer’s salary is likely to be spent on fuel, meaning that less will be spent on other goods and services. Businesses face the same issue, where transport costs will increase, which makes it more expensive to manufacture and/or sell their products. These costs are often passed on to the consumer in the form of higher prices charged for the goods and services, Van Wyk pointed out.
FP du Toit
Fuel represents about a third of all FP du Toit Group’s expenses, its CEO Stephan Terblanche said.
The impact of only last year’s fuel price hikes meant the group should have increased its rates by 11% this year. However, the group, which has a fleet of more than 600 vehicles in operation, had to absorb these increases in order to stay competitive in the market, he said.
The only way to counter increasingly expensive fuel is to grow business and efficiencies continually, he added.
Some transport businesses unfortunately had to close their doors and the FP du Toit Group fills this gap in the market. New business increases the group’s turnover and lowers the fixed-cost allocation per vehicle.
In addition, the group strictly controls all costs. Fuel consumption, together with other input costs, are managed more effectively continuously.
The entire economy is affected by more expensive fuel and the increases will have an impact on every consumer. “It’s a vicious circle,” Terblanche said.
Nabta
Government will have to intervene and come to the rescue of public transport operators, Penda Nakathingo, the secretary-general of the Namibia Bus and Taxi Association (Nabta), said.
Approached for comment, Nakathingo said the new hikes will have a “very serious impact on the survival” of the industry. It already suffered a massive hit with the Covid-19 pandemic.
“We will have no business again,” he said.
Nabta will approach government to seek mitigating measures. If government doesn’t help, its only option will be to increase fares, which many Namibians already struggle to afford, he said.
WINDHOEK
From tomorrow, motorists will pay N$1.20 per litre extra for petrol and N$1.30 more for diesel, the ministry of mines and energy has announced.
This is the second fuel price increase for the year, following eight increases in 2021. The ministry warned that the country might continue to experience further fuel price increments during the coming months as the market remains volatile.
According to Robert McGregor, head of research at Cirrus Capital, these increases put both petrol and diesel prices at a new all-time high in Namibia. Year-on-year, the price of petrol will increase by 35.6% and diesel by 36.3%
Despite the historic increase, prices are still substantially lower than in South Africa - around N$3.73 per litre cheaper for petrol and N$1.68 per litre cheaper for diesel, McGregor pointed out.
According to the ministry’s executive director, Simeon Negumbo, the sharp increases in petroleum products are ascribed by the mismatch between global oil supply and demand.
The Organisation of the Petroleum Exporting Countries (OPEC) had to cut its supply drastically, and is now reluctant to increase supply. In addition, geopolitical tension in oil-producing regions is also driving up fuel prices, he pointed out.
Negumbo noted that the appreciation of the Namibia dollar was not significant enough to offset the sharp increase in fuel products.
Under-recoveries of 140 cents per litre on petrol and 160 cents per litre on diesel were recorded at the end of February.
The National Energy Fund will cover all the under recoveries recorded at the end of last month on behalf of the fuel consumers, at about N$143 million, he said.
Impact
According to Simonis Storm economist Theo Klein, transport has a weight of 14.3% in the Namibian consumer price basket, used to calculate national inflation rates. This means the average household spends about 14% of its budget on transport, where fuel prices would typically form the biggest component.
“With household budgets already stretched and under pressure, we expect to see less domestic tourism activity taking place due to higher fuel costs making camping trips and inter-regional travel more expensive for locals,” he said.
Meanwhile, Danie van Wyk, head of research at IJG Securities, noted that rising fuel prices mean that a larger percentage of a consumer’s salary is likely to be spent on fuel, meaning that less will be spent on other goods and services. Businesses face the same issue, where transport costs will increase, which makes it more expensive to manufacture and/or sell their products. These costs are often passed on to the consumer in the form of higher prices charged for the goods and services, Van Wyk pointed out.
FP du Toit
Fuel represents about a third of all FP du Toit Group’s expenses, its CEO Stephan Terblanche said.
The impact of only last year’s fuel price hikes meant the group should have increased its rates by 11% this year. However, the group, which has a fleet of more than 600 vehicles in operation, had to absorb these increases in order to stay competitive in the market, he said.
The only way to counter increasingly expensive fuel is to grow business and efficiencies continually, he added.
Some transport businesses unfortunately had to close their doors and the FP du Toit Group fills this gap in the market. New business increases the group’s turnover and lowers the fixed-cost allocation per vehicle.
In addition, the group strictly controls all costs. Fuel consumption, together with other input costs, are managed more effectively continuously.
The entire economy is affected by more expensive fuel and the increases will have an impact on every consumer. “It’s a vicious circle,” Terblanche said.
Nabta
Government will have to intervene and come to the rescue of public transport operators, Penda Nakathingo, the secretary-general of the Namibia Bus and Taxi Association (Nabta), said.
Approached for comment, Nakathingo said the new hikes will have a “very serious impact on the survival” of the industry. It already suffered a massive hit with the Covid-19 pandemic.
“We will have no business again,” he said.
Nabta will approach government to seek mitigating measures. If government doesn’t help, its only option will be to increase fares, which many Namibians already struggle to afford, he said.
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