Fuel retailers scramble to avoid losses
11 May 2020 | Energy
A brief stock shortage of petrol and diesel last Wednesday at some fuel stations was due to savings measures by retailers.
Following several queries from the public who arrived at fuel stations that had run out of petrol and diesel, ministry of mines and energy spokesperson Andreas Simon said some fuel retailers had placed their orders at the last minute for new stock.
The retailers had intended to finish their old stock before the fuel price decreased on Wednesday, he explained.
In some cases, this led to fuel stations being unable to service customers for a few hours.
“They argue that if they had continued with the old stock after the effective date of the new price, they would be selling their fuel at a cheaper price.
“So, it was basically a saving measure on their part,” Simon said.
He added that the brief gap in availability was quickly rectified, and the new stock is being sold at the lower prices, according to the adjustment for the month of May.
Both Hamutele Lazarus Nafidi, spokesperson for Vivo Energy Namibia, and Engen Namibia confirmed this.
Fuel price relief
The drop in fuel prices was announced by mines and energy minister Tom Alweendo, who said the price for both 95 Octane Unleaded Petrol and diesel would drop by N$1 per litre.
“Like all other sectors of the economy, our local oil industry, both bulk importers and fuel retailers, were negatively affected by the national lockdown to curb the spread of Covid-19.
“Local demand for fuel has dropped significantly,” he said.
Alweendo added that bulk fuel importers are only selling a “fraction of what they usually sell”, while some retailers' sales are “close to nothing, depending on their location”.
The minister said the decrease in fuel prices was necessitated by the fallout of the coronavirus pandemic, which has brought the global transport industry to near standstill, causing the demand for oil around the world to drop significantly against a huge supply.
The imbalance between demand and supply led to the collapse of global oil prices and was also accompanied by a sharp depreciation in the exchange rate between the Namibian dollar against the US dollar, which could potentially offset the benefits of a decline in oil prices, Alweendo said.