Windhoek — Motorists will have to brace themselves again on Wednesday this week when the recent warnings by economists that the fuel prices will continue to rise will become reality. Minister of Mines and Energy. Tom Alweendo, confirmed in a statement yesterday that Petrol will increase by 50 cents a litre while all grades of Diesel will go up by 70 cents a litre.
These increases will see owners of diesel vehicles fork out N$14.48 per litre for Diesel 500ppm and N$14.53 per litre for Diesel 50ppm at the pumps in Walvis Bay. These amounts increase incrementally the further inland the fuel is transported.
According to Alweendo's statement, the ministry is cognisant of the fact that fuel prices have been increasing for the past few months. However, he points out that the ministry has not been passing on the full increases to consumers as over the past few months, more than N$470 million has been spent from the National Energy Fund to fund the fuel price increases.
The mines and energy minister noted that the increase is attributed mainly to two factors, namely the global price per barrel of refined oil and the exchange rate between the Namibia Dollar against the US dollar.
"There also remains a shortage of oil in the global market after Iran's supply was reduced by the sanctions imposed on Iran by the US. Whenever there is a shortage of supply in the market, prices of oil, naturally, go up as they have been for the past several months. Month-to-month, the price of oil has remained stable at an average of US$86 per barrel of refined petrol and US$95 per barrel of refined diesel in October, 2018. The exchange rate has, however, weakened marginally, from an average of N$14.40 in September, 2018, to an average of N$14.50 in October," Alweendo stated.
He added that bulk oil importers rely on the profit margin on the pump price in order to sustain their operations. "After the assessment of the return they are getting on their investment, it was revealed that there is a short-fall of 2 c/l. It is for this reason that the ministry has decided to increase the Industry Margin by 2 c/l, effective from 07 November, 2018," said Alweendo.
He reiterated that the Minister of Mines and Energy is responsible for reviewing local fuel pump prices on a monthly basis to ensure that there is a balance between the prices charged at the pumps and the actual cost of importing fuel to Namibia's shores.