22 August 2006

Namibia: Fuel Hike Starts to Bite

NAMIBIA'S farmers expect to be severely affected as fuel prices continue to spiral up, with last week's increase alone - 50 cents a litre - pushing up their operating costs by 20 per cent .

The increase, which came into force on Friday, is the fifth of the year, with petrol and diesel both shooting up by 50 cents a litre - the largest single increase in recent years.

The fishing industry is hunkering down, predicting "millions of dollars" in extra running costs, while transport companies anticipate the increase will add 10 per cent to their input costs.

The ripple effect is being felt across the board, with the prices of almost everything from transport to basic commodities and rent also going up.

Fuel on average made up 15 per cent of the annual operating costs for farmers, Sakkie Coetzee, Executive Manager of the Namibia Farmers' Union (NAU) told The Namibian yesterday.

"A fuel hike of 50 cents per litre, which we experienced with the latest diesel and petrol price increases, pushes up the operating costs for a farmer as high as 20 per cent, in other words one-fifth of his overall operating expenses," the NAU executive manager said.

He said the ever-increasing fuel price spiral constantly put the net income of farmers across the board under pressure.

"Although beef and mutton prices increased this year, allowing farmers a little profit margin, the last two fuel hikes practically cancelled these profits for them," he said.

Crop producers were even harder hit, Coetzee said.

"The increased diesel price is a much higher input cost for them than for the livestock farmer," Coetzee told The Namibian.

The fishing industry is also reeling under the weight of the hikes.

Fishing trawlers mainly use diesel and fuel costs were the highest expense when it came to annual running costs, Volker Kuntzsch, Managing Director of Hangana Seafood, one of Namibia's leading fishing companies at Walvis Bay, told The Namibian yesterday.

"Even if the prices are just increased by a few cents, it translates into several hundred thousand Namibia dollars of additional cost, but the latest price hike of 50 cents has reached a dimension of millions of dollars in extra running costs," Kuntzsch told this newspaper.

"The only saving grace is the slightly improved exchange rate, since the Namibia dollar has dropped against the US dollar and the Euro," he added.

"We mainly export our fish products and so we can balance the fuel hikes a little bit against the favourable exchange rate, while the price of crude oil has also come down over the past few days, so we hope the fuel prices might be lowered again in Namibia at a later stage," Kuntzsch said.

Increased fishing quotas would help the fishing industry considerably, he added.

"We hope to make good hake catches until the end of September, because for the whole of October no hake may be caught.

The Ministry of Fisheries has prohibited any hake catches for that month in order to give the juvenile hake an undisturbed period."

Meanwhile, sections of the transport sector have already had to pass on the added expense to customers.

The Namibia Bus and Taxi Association (Nabta) gave in to the price pressure and raised its fares by 10 per cent in June - almost a year after its previous hike.

A spokesman for the Namibia Road Carriers Association (Namroad), Willie du Toit, said this year's fuel price hikes had increased input costs for heavy vehicle owners by 10 per cent.

"It's obviously a severe blow ... However, unfortunately, the transport industry can't absorb the costs and we pass them on to our customers," Du Toit said.

Namroad has a membership of 26 trucking companies and deals mainly with manufacturers and traders, who have to transport large quantities within Namibia and the southern African region.

However, TransNamib, the company responsible for Namibia's rail transportation, said the higher fuel prices did not affect its operations in any way.

TransNamib's chief public relations officer, Olivia Kanyemba-Usiku, said the company would not pass on any costs to train users.

"Normally the increases don't affect us," she said, without elaborating on how TransNamib was absorbing the higher cost of diesel, which powers all its locomotives.

In spite of the diesel increases, TransNamib has not increased its passenger and cargo tariffs this year.

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