Fuel woes continue
A dealer margin survey has indicated that fuel dealers are failing to run their businesses profitably, due to inflation and other cost factors.
Namibians are braced for yet another fuel price hike on Wednesday, while the Road Fund Administration (RFA) has also increased motor vehicle registration and licence fees.
Fuel pump prices at Walvis Bay will increase by 30 cents per litre for both 95 Octane unleaded petrol and diesel 50ppm.
Energy minister Tom Alweendo explained that fuel is traded internationally using US dollars. Therefore, local bulk importers convert Namibian dollars to US dollars to enable them to import fuel products.
The average exchange rate between the two currencies for the trading cycle between 26 April and 24 May was N$14.35 for one US dollar.
In contrast the average exchange rate for April was N$14.1.
“Therefore the latest figure of N$14.35 per US dollar indicates that the Namibian dollar has depreciated against the US dollar and therefore it has become more expensive to import fuel to Namibia,” Alweendo said. Fuel is traded in barrels, with one barrel equalling 159 litres.
For the trading cycle under review, one barrel of 95 Octane unleaded petrol traded at an average price of US$79.1 or N$1 135.24 and one barrel of diesel 50ppm traded at an average price of US$ 83.430 or N$1 197.37.
The average barrel prices recorded for April were US$80.725 or N$1 141.45 for Octane unleaded petrol and US$82.738 or N$1 169.92 for diesel 50ppm. This indicates that the average barrel prices have remained relatively stable.
“Barrel prices for refined fuel are determined by demand and supply factors mainly affecting the Organisation of Petroleum Exporting Countries (OPEC), such as the cost of production, competition, profits and geopolitics,” Alweendo said.
According to him, the government sets fuel pump prices based on the latest market indicators every month, in order to ensure that fuel suppliers recover the costs of supplying fuel to Namibia.
“An under-recovery indicates that the suppliers have traded below the full cost of supply, while an over-recovery indicates that suppliers have traded above the cost of supply. The idea is, thus, for the government to keep the prices paid at the pumps equal to the actual cost of supply.”
Alweendo also said a dealer margin survey report was recently compiled and submitted to the ministry for consideration. This survey investigates the activities of fuel service stations.
The results of the report indicated that, on average, fuel dealers are failing to run their businesses profitably due to inflation and other cost factors. Since the fuel dealers operate in a price-controlled market, the government is obliged to review their margins from time to time and adjust them accordingly.
Guided by the results of the report and other technical considerations, such as the general inflation rate, the ministry has resolved to increase the dealer margin by six cents per litre to 106 cents on all controlled products, effective 5 June.
In line with the fuel pricing formula agreed between government and the local oil industry, the results for the trading cycle under review indicate that fuel suppliers are still trading below the cost of supply.
“Included in the 30 cents per litre adjustments is the six cents per litre for the dealer margin,” Alweendo said. Fuel pump prices in Walvis Bay will now be N$13.05/l for 95 Octane unleaded petrol and N$13.63/l for diesel 50ppm.
Fuel pump prices countrywide will be adjusted accordingly.
Alweendo said it should, however, be remembered that the final under-recoveries recorded at the end of April were not fully passed on to consumers, and as a result, the National Energy Fund (NEF) absorbed about N$112 million on behalf of consumers in under-recoveries during the last trading cycle alone.
He added that government would further like to reassure the public that it is committed to maintaining a stable fuel pricing framework that reflects market realities.
ELLANIE SMIT
Fuel pump prices at Walvis Bay will increase by 30 cents per litre for both 95 Octane unleaded petrol and diesel 50ppm.
Energy minister Tom Alweendo explained that fuel is traded internationally using US dollars. Therefore, local bulk importers convert Namibian dollars to US dollars to enable them to import fuel products.
The average exchange rate between the two currencies for the trading cycle between 26 April and 24 May was N$14.35 for one US dollar.
In contrast the average exchange rate for April was N$14.1.
“Therefore the latest figure of N$14.35 per US dollar indicates that the Namibian dollar has depreciated against the US dollar and therefore it has become more expensive to import fuel to Namibia,” Alweendo said. Fuel is traded in barrels, with one barrel equalling 159 litres.
For the trading cycle under review, one barrel of 95 Octane unleaded petrol traded at an average price of US$79.1 or N$1 135.24 and one barrel of diesel 50ppm traded at an average price of US$ 83.430 or N$1 197.37.
The average barrel prices recorded for April were US$80.725 or N$1 141.45 for Octane unleaded petrol and US$82.738 or N$1 169.92 for diesel 50ppm. This indicates that the average barrel prices have remained relatively stable.
“Barrel prices for refined fuel are determined by demand and supply factors mainly affecting the Organisation of Petroleum Exporting Countries (OPEC), such as the cost of production, competition, profits and geopolitics,” Alweendo said.
According to him, the government sets fuel pump prices based on the latest market indicators every month, in order to ensure that fuel suppliers recover the costs of supplying fuel to Namibia.
“An under-recovery indicates that the suppliers have traded below the full cost of supply, while an over-recovery indicates that suppliers have traded above the cost of supply. The idea is, thus, for the government to keep the prices paid at the pumps equal to the actual cost of supply.”
Alweendo also said a dealer margin survey report was recently compiled and submitted to the ministry for consideration. This survey investigates the activities of fuel service stations.
The results of the report indicated that, on average, fuel dealers are failing to run their businesses profitably due to inflation and other cost factors. Since the fuel dealers operate in a price-controlled market, the government is obliged to review their margins from time to time and adjust them accordingly.
Guided by the results of the report and other technical considerations, such as the general inflation rate, the ministry has resolved to increase the dealer margin by six cents per litre to 106 cents on all controlled products, effective 5 June.
In line with the fuel pricing formula agreed between government and the local oil industry, the results for the trading cycle under review indicate that fuel suppliers are still trading below the cost of supply.
“Included in the 30 cents per litre adjustments is the six cents per litre for the dealer margin,” Alweendo said. Fuel pump prices in Walvis Bay will now be N$13.05/l for 95 Octane unleaded petrol and N$13.63/l for diesel 50ppm.
Fuel pump prices countrywide will be adjusted accordingly.
Alweendo said it should, however, be remembered that the final under-recoveries recorded at the end of April were not fully passed on to consumers, and as a result, the National Energy Fund (NEF) absorbed about N$112 million on behalf of consumers in under-recoveries during the last trading cycle alone.
He added that government would further like to reassure the public that it is committed to maintaining a stable fuel pricing framework that reflects market realities.
ELLANIE SMIT
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