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Botswana: Fuel Prices Shoot Up Again
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Mmegi/The Reporter (Gaborone)
15 April 2008
Posted to the web 15 April 2008
Brian Benza
For the second time in as many months, fuel pump prices have gone up again, cutting deeper into people's disposable incomes.
In a statement released yesterday, the Permanent Secretary in the Ministry of Minerals, Energy and Water Resources Gabaake Gabaake said the price of both unleaded and lead petrol will increase by 48thebe while diesel will go up by a hefty 161thebe beginning 1am today.
The price of illuminating paraffin has been yanked by 155thebe per litre. As though the price increases were not bad enough for consumers already reeling from the assault of unrelenting food price increases, Gabaake's statement also said from now on, fuel prices would be increased on a monthly basis in order to keep pace with trends on the international market. The price increase is caused by (a) continuing worldwide increase in crude oil prices which averaged about US$80(P516) per barrel in October 2007 and went up to US$103(P665) per barrel last month.
Prices are likely to continue to increase as evidenced by the record price of US$108.28(P700) per barrel reached on April 9, 2008.
"With effect from this month, Government will introduce a system of adjusting prices on a monthly basis to reduce lead time between adjustments. The monthly adjustment will be driven by movements on the international market," Gabaake said.
In and around Gaborone, petrol will now cost P6.33 while diesel will cost P7.38. Paraffin, which is mainly used by the poor, will cost P6.95 from P5.40. Apart from crude oil price increases on the international market, the deprecation of the pula against the US dollar has also contributed to fuel price increases on the domestic market as more pulas are required to buy the commodity traditionally sold in US dollar terms.On a year-to-date basis, the pula has weakened by about 9.5 percent to the US dollar.
The latest increase in retail fuel prices will see motorists having to spend more than they could have anticipated for this time of the year, the increases being far steeper than usual. The latest increase will hit especially hard on poor workers, who could soon be faced with higher transport costs on top of already high bread, milk and other staple food prices. Fuel price adjustments used to be in the range of 20thebe to 25thebe per litre.
In December last year, government raised the price of petrol by 25thebe, diesel by 20thebe and paraffin by 20thebe per litre. Last February, petrol and diesel went up by 25thebe and 50thebe respectively.
On the back of the energy and food price increases, inflation is expected to go into double digit figures soon, threatening to make the 6 percent year inflation target unattainable.
But the massive fuel and food price hikes are not peculiar to Botswana. The World Bank estimates that 33 countries around the world face potential social unrest because of unrelenting rises in food and energy prices.
Food riots, which started last year with the tortilla protests in Mexico, have now spread to Cameroon, Senegal, C™te d'Ivoire, Mauritania, Egypt, Haiti, Indonesia and Peru.
With a GDP of around US$12,000(P77,520) per capita, the highest in Africa, Botswana's high salary levels are expected to cushion consumers for a while, though this is unlikely to be sustained beyond the near- or long-term.
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According to a Business Day newspaper report, the Congress of South African Trade Unions (COSATU) yesterday warned it would mobilise thousands of members in protest at rising food and energy prices in South Africa.
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