Motorists should brace themselves for a steep hike in fuel prices as the Ministry of Mines and Energy announced that fuel pump prices will increase by N$1,20 for petrol and diesel by N$1,30 from Wednesday, 02 March.
The new fuel prices will become N$17.15 per litre for petrol and N$17.28 per litre for diesel, effective 00h01 on 2nd March 2022.
The ministry said the continuous mismatch between global oil supply and demand coupled with the ever-rising geopolitical tensions in Eastern Europe have driven up the prices of oil to their highest levels since 2014.
"For oil price takers like Namibia and other non-oil producing countries, this can only mean that domestic oil prices will keep shooting upwards until there is some form of stability in the market, which appears to be highly unlikely in the foreseeable future," the ministry's executive director, Simeon Negumbo announced Monday.
The latest calculations by the ministry indicate that the average price for Unleaded Petrol 95 over the course of February 2022 is USD107.874 per barrel (compared to USD96.885 per barrel for January 2022).
Additionally, the average price for Diesel 50ppm over the course of February 2022 is USD108.402 per barrel (compared to USD97.961 per barrel for January 2022). These sharp increases amount to about USD1.1 per barrel in a matter of a few weeks, a clear indication of where the oil market is currently headed to.
Further, the exchange rate figures for February 2022 indicate that the Namibia Dollar has recorded yet another appreciation against the USD at N$15.2004 per USD (compared to N$15.4861 per USD during January 2022).
"This positive implication is, however, hugely suppressed by the sharp increase in oil prices," Negumbo said.
"Therefore, after entering the above input factors into the fuel pricing model, the ministry recorded a couple of very large under-recoveries on both products, namely N$1,46 per litre on petrol and N$1,60 per litre on diesel."
Negumbo said in as much as the current oil prices appear to be untenable, Namibians must continue to remain strong to endure "because we have found ourselves in a very difficult global oil market environment."
The National Energy Fund will cover the entirety of the under-recoveries recorded for the month of February 2022 on behalf of fuel consumers through the fuel equalization levy. This amounts to approximately N$143 million.