More fuel shocks

In August 2012, the petrol price was N$9.96 per litre and N$10.36 for diesel (500ppm) in Windhoek, while the August 2018 prices are N$12.97 and N$13.31 per litre, respectively.

17 August 2018 | Energy

Independent economist Klaus Schade says the weakening of the South African rand means motorists in that country and Namibia will continue to fork out more for petrol and diesel.

The rand is having a torrid time of late and was trading at 14.57 to the US dollar yesterday afternoon.

“The South African rand and hence the Namibia dollar has come under pressure recently, owing to domestic factors such as the debate about land expropriation and global factors such as the United States' sanctions against Turkey, which resulted in investor sentiment turning against emerging market currencies such as our currency,” Schade said.

According to information provided by the energy ministry, under-recoveries for the month of June stood at N$0.63 per litre for petrol, N$0.57 for 500ppm diesel and N$0.56 for 50ppm diesel.

As a consequence, fuel prices would likely have to increase in order to recover losses that fuel retailers may suffer as a consequence.

“So far, the National Energy Fund (NEF) has absorbed under-recoveries (losses from the sale of fuel). If under-recoveries continue, the NEF will most likely increase prices in order to recovery losses,” Schade said.

Energy minister Tom Alweendo said Namibia's fuel is still cheap compared to other countries in the region.

He was responding to Namibian Sun queries regarding the escalating fuel prices in the country, as well as the region, which have motorists up in arms and battling to make ends meet.

For the better part of the year, local motorists did not experience any fuel hikes except for the months of June and August, which also saw an increase in the fuel tax.

“The ministry cannot really contain the increases, given what influences them. However, the ministry uses the NEF to cushion the increases by subsidising the pump price. At N$12.97 per litre, petrol is still cheap,” Alweendo said.

Namibians can count themselves lucky that they do not pay as much as motorists in other southern African countries, with the exception of Botswana.

Energy permanent secretary Simeon Negumbo explained that factors such as insurance, freight costs and the cost of the fuel itself all pay a part in what motorists are paying.

“The basic fuel price is mainly made up of cost, insurance and freight. The domestic levies and margins are then added on top of the other costs to come up with a final pump price per town,” explained Negumbo.

In instances where the fuel price is lower than the market determined prices, a cost-recovery model is used to ensure that prices are adjusted upwards to create equilibrium in the market.

The cost-recovery model is also used to adjust prices downwards to the level determined by the market to bring prices to equilibrium, Negumbo explained.

Explaining the price differences across the region, he said the Botswana pula gives motorists in that country some respite from rising fuel costs, while the South African government does not subsidise fuel, as is the case in Namibia.

“South Africa does not subsidise its fuel; all costs are passed on directly to consumers. Botswana's pula is a bit stronger than the Namibia dollar and hence Botswana has some comparative advantage in international trade.”

Schade said Namibian motorists can be consoled by the fact that fuel is cheaper here than in South Africa, where petrol prices have now hit N$16 a litre in places.

“Namibia's per capita income is higher than in most neighbouring countries except for Botswana and South Africa. Hence, fuel is more affordable in Namibia than in our neighbouring countries with the exception of Botswana, where it is cheaper,” Schade said.

Despite the increases witnessed, fuel prices are cheaper, according to Schade, relative to 2012 price levels and inflation.

“In August 2012, the price for petrol 95 was N$9.96 per litre and for diesel (500ppm) it was N$10.36 per litre in Windhoek. In August 2018, prices are N$12.97 per litre and N$13.31 per litre, respectively.

“However, taking inflation over the years into account prices are currently lower than they would have been, had they increased at the same pace as inflation. Adjusted for inflation since 2012, 95 petrol would cost N$13.85 per litre and diesel 500ppm N$14.41 per litre,” said Schade.

“Hence, for motorists who have received inflation-adjusted salary increases over the years, fuel has become even more affordable.”

Recently, South African motorists took to the country's highways to demand lower fuel prices.

Main roads and highways in Pietermaritzburg were blocked by trucks parking in the road.

The protest came after the fuel price saw five increases this year, with more increases expected.

This according to the Automobile Association (AA), which was commenting on unaudited July mid-month fuel price data released by the Central Energy Fund.

On Monday, supporters of former South president Jacob Zuma called on voters to boycott next year's general elections if political parties failed to pressure President Cyril Ramaphosa to curb petrol price increases.

People Against Petrol and Paraffin Price Increase said they had requested several political parties to be part of the protest, but only Black First Land First (BLF) and the lesser known National Peoples Ambassadors attended.

Similar News

 

New Harambee electricity targets

4 days ago - 18 March 2019 | Energy

Deputy energy minister Kornelia Shilunga says government will soon commit itself to the 100% electrification of schools, hospitals and other public institutions, as well as...

Eskom too big to fail

1 month - 07 February 2019 | Energy

Eskom was too big and too important for South Africa to be allowed to fail, President Cyril Ramaphosa said on Tuesday.The troubled South African state-owned...

Opoloyela yolusheno lwoonkondo dhetango mOkatope ya tameke

1 month - 04 February 2019 | Energy

Omahangano gatatu ngoka ga pewa ootendela kehangano lyoku andjakaneka olusheno moNamibia lyaNamPower, opo ga tulepo oosasiyona ndatu dhoolusheno lyoonkondo dhetango mOkatope moshitopolwa shaShikoto oga tameke...

Resized Kudu affordable - Namcor

1 month - 31 January 2019 | Energy

The National Petroleum Corporation of Namibia (Namcor) is confident that the revised Kudu gas-to-power project, which will now only supply energy to the local market,...

Seismic oil exploration starts offshore

1 month - 23 January 2019 | Energy

Augetto Graig Portuguese-based energy company Galp will start with a 3D seismic research campaign in Namibia’s Deep-water Offshore Licence PEL83 in the Orange Basin on...

Namcor prevails

2 months ago - 18 January 2019 | Energy

The National Petroleum Corporation of Namibia (Namcor) has been chosen to manage the strategic fuel storage facility in Walvis Bay, but will initially appoint a...

Stable rand to help fuel prices

2 months ago - 03 January 2019 | Energy

Simonis Storm analyst Indileni Nanghonga believes that fuel prices could drop further if the rand strengthens against the US dollar. This follows a reduction...

Southern RED set for 2019

2 months ago - 28 December 2018 | Energy

The establishment of the Southern Regional Electricity Distributor is expected to be completed in 2019 following the finalisation of a formula that will reimburse local...

Less time at the pump, more fun on the...

3 months ago - 04 December 2018 | Energy

Due to increasing crude oil prices and exchange rate depreciation, Namibians now pay record prices for fuel at filling stations. These increases place even greater...

Fuel prices up again

4 months ago - 06 November 2018 | Energy

OGONE TLHAGEFuel prices will increase for the fourth time in as many months tomorrow.The minister of mines, Tom Alweendo, yesterday announced that all diesel grades...

Latest News

Millions unaccounted for at NDC,...

2 days ago - 20 March 2019 | Economics

The Namibia Development Corporation (NDC) has failed to submit documentary evidence to prove how it spent N$90.1 million between 2015 and 2017, the latest report...

Aluta continua!

2 days ago - 20 March 2019 | Columns

Tomorrow is without doubt a significant day in our national history, as we pause to celebrate the spirit of our forefathers and struggle heroes and...

Africa Briefs

2 days ago - 20 March 2019 | Economics

No end date for Eskom’s power cutsSouth Africa's public enterprises Minister Pravin Gordhan said yesterday he cannot say yet when rolling blackouts will end, as...

Cob plundering suspects nabbed

2 days ago - 20 March 2019 | Crime

Leandrea Louw Two men arrested on Saturday for allegedly being in possession of 60 large cob made their first appearance in the Walvis Bay Magistrate’s...

Unfinished pipeline impacts 7 000...

2 days ago - 20 March 2019 | Infrastructure

About 6 932 people and 33 790 large and 18 395 small stock units are facing thirst, as the agriculture ministry battles to finish the...

Apple unveils new iPad, updates...

2 days ago - 20 March 2019 | Technology

Sonam RaiApple Inc, in a surprise move on Monday, launched a new 10.5-inch iPad Air and updated its iPad Mini ahead of a March 25...

Climate change and productivity

2 days ago - 20 March 2019 | Agriculture

Climate change is a long-term change in climatic/weather patterns of the earth or region. Such change is observed in temperature and rainfall patterns, amongst others....

Palladium hits record high

2 days ago - 20 March 2019 | Business

Palladium surged to a record yesterday as the risk of a ban on some Russian exports added to supply concerns for the autocatalyst metal. Spot...

State supports non-compliant security firms

2 days ago - 20 March 2019 | Business

Employers and trade unions agree that one of the major issues facing the Namibian security services industry is that some government institutions continue to appoint...

Load More