Phillimon Molaodi
11 October 2005
There is no problem in reviewing the composition of the National Petroleum Fund (NPF) committee, Permanent Secretary in the Ministry of Minerals, Energy and Water Resources has said.
"We can look at that, but in setting up the committee, it was thought that the role of government through the Ministry of Energy, is to represent the consumers," said Dr Akolang Tombale in an interview yesterday.
The committee responsible for the increments, comprises the ministry's permanent secretary Tombale as chairman, secretary of financial affairs and chief finance administrator in the Ministry of Finance and Development Planning, director and senior energy officers both in the Energy Affairs Department and the managing director of Stanbic Investment Management services.
"It is something we can look at for transparency purposes, so that the consumers can even get to know and appreciate what is going on," Tombale added.
The management committee, which was introduced in 1986, has in recent times attracted a lot of attention from the public after soaring crude oil prices. The international oil prices have skyrocketed violently to levels never seen before and that saw upward adjustments in fuel prices on the domestic front.
The adjustments effected for the domestic petroleum pump prices are discussed and recommended by the NPF committee. It is the composition of the committee that is queried by consumers, saying it does not include them and that they effectively do not have a say in setting the most crucial price. Fuel prices have been increased three times this year by an average of P1.15 for petrol; P0.82 for diesel and paraffin saw an increase of P0.62. Apart from the appreciation of the fact that international crude oil markets are not favourable, concerns regarding the domestic fuel pricing have been raised.
"Their meetings amount to a cartel. It is collusion because that is where they are discussing the consumer in his/her absence," said a commentator referring to meetings that negotiate for price adjustments. In Botswana, it has been tradition to increase prices on a quarterly basis due to the cushion from the fund but it has since been reported that the base of the fund is getting thin.
"If prices keep going up, NPF cannot cope," explained Tombale.
Of the current P4.12 per litre cost of petrol, NPF gets only 1.5 percent, which translates to P0.0618 while dealers' margin is 6.33 percent (P0.2608) and industry margins is calculated at 8.46 percent or P0.3486. Industry margins comprise depot storage and handling, road delivery, grid differential and industry margin. All these are controlled by the oil industry players. The largest share goes to import price with 75.94 percent (P3.1287).
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