WINDHOEK-based taxi driver Fransiskus Shikongo says life in Namibia is becoming tougher by the day, worsened by ever-increasing fuel prices.
Namibia has seen three consecutive increases in the prices of diesel and petrol in the past five months, leaving small businesses reeling.
The latest increase announced yesterday sees petrol prices increasing by N$2,50 per litre and diesel by N$1,50 per litre as of midnight on Tuesday.
In real terms fuel prices at Walvis Bay will now be N$20,40 per litre for petrol, and N$21,43 per litre for diesel.
Shikongo says the price of fuel, which is now hovering at around N$20 per litre, has forced him to reduce his operations, losing potential profit in the process.
"We are not going to make a profit already, and now we have to pay a lot for petrol. That means we are only working for petrol and we are not making a profit at all," he says.
Shikongo says the continuous fuel increases have also left most taxi drivers' clients struggling.
"Customers cannot afford to pay full price," he says.
Shikongo's plight is also being felt by other small business owners, such as cuca shop owner Jossi Petrus.
Petrus says he can no longer afford to transport his wares to and from his shop.
Vendor Kangherao Nghihepa, who trades in vegetables and cooked food in Windhoek's central business district, says while fuel prices are going up, the salaries of his potential customers remained stagnant, eroding their buying power in the process.
"Adding more on each litre is not a good sign for our economy, as well as the fact that we are in a developing country," he says.
Deputy minister of mines and energy Kornelia Shilunga says the latest calculations of the Ministry of Mines and Energy indicate that the average price for unleaded petrol 95 from 1 to 20 May was US$142.781 per barrel, compared to US$126.260 per barrel at the end of April 2022 - an increase of about US$16 over the review period.
Shilunga says the average price for diesel 50ppm from 1to 20 May was US$152.147 per barrel, compared to US$150.117 per barrel at the end of April 2022 - a lower increase of about US$2 per barrel over the review period.
"Furthermore, the exchange rate figures for the period 1 to 20 May 2022 indicate that the Namibia dollar has recorded a huge depreciation against the US dollar at N$15.9606 per US dollar, compared to N$15.0384 per US dollar at the end of April 2022.
"This huge currency depreciation entails that the business of conducting international transactions is more expensive," she says.
The ministry recorded huge under-recoveries on the two products, namely an under-recovery of 280 cents per litre on petrol, and an under-recovery of 156 cents per litre on diesel.
"It must be understood that if the ministry did not reduce the fuel levies during last month's review, the current cost of fuel would have been higher," the deputy minister says.
"The ministry would like to remind the public that Namibia is a price taker in the international oil market. It is therefore important to understand that the government is only in direct control at the levels of domestic levies, taxes, and margins regarding the price of fuel."
Shilunga says the ministry will continue to monitor global oil market developments, and to take the best possible decisions to safeguard the interest of Namibian fuel consumers.
'TRIGGERED BY SANCTIONS'
University of Namibia professor of economics Jacob Nyambe says the fuel hikes were expected and are largely influenced by the global price of oil.
"That was triggered by sanctions on Russia by the West. Saudi Arabia and other suppliers alone can't offset the demand," he says.
Simonis Storm Securities economist Theo Klein says the recent decision by the government to remove levies provided consumers with some relief.
He says the average oil price has increased between April and May, from US$106 to US$110 per barrel.
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"I also think the weaker rand was driving the under-recoveries they incurred - more than the increase in oil prices.
"With the weaker rand, which we do see going forward, and elevated oil prices, there's definitely scope for additional fuel hikes," he says.
Standard Bank economist Solomon Kint says the fuel price increases should come as no surprise given what's happening globally.
"Suppliers are also benefiting from the higher oil prices from a profit perspective, and are unlikely to ramp up production in the short to medium term. Flooding the market with more oil will reverse the current profitability trends and go against the future need to shift to renewable energy sources," he says.
"This will also continue to add increased inflationary pressure in Namibia with transport and food now being significant drivers of inflation in the economy.
"The two categories alone contributed 67% to the country's annual inflation rate of 5,6% recorded in April," Kint says.
