Independent economic researcher Josef Sheehama has welcomed the upcoming fuel decrease, saying that lower petrol and diesel prices have a far wider impact than merely benefiting Namibians who travel a lot.
"Namibia's economy is highly reliant on road transport and fuel prices impact all sections of the economy.
Fuel prices directly impact the cost of products transported by road, which in turn impacts inflation," Sheehama said.
This comes after an announcement yesterday that motorists and businesseses dependent on fuel can expect some relief during the festive season, as the price of both petrol and diesel is expected to decrease by N$1,30 per litre.
Starting from 6 December, petrol will be priced at N$21,58 per litre, diesel 50ppm at N$21,85 per litre, and diesel 10ppm at N$22,05 per litre.
According to Sheehama, the reduction in prices will bring joy to businesses, especially those dependent on diesel generators for their operations.
"The fuel price cuts will reduce the costs for these businesses and will in turn benefit the country's economy," Sheehama said.
GLOBAL INFLUENCE
The mines and energy ministry announced that the choice to decrease domestic fuel prices was shaped by worldwide events, as international oil prices have recently fallen due to significant disagreements among Organisation of the Petroleum Exporting Countries (Opec) members regarding crude oil production targets.
The discord within Opec primarily stems from the requests of two African member states, Angola and Nigeria, advocating for an increase in their crude oil production quotas.
"Although Opec is working to resolve these matters, there is currently sufficient supply of oil products in the market, which has put a lot of downward pressure on oil prices for the period under review," ministerial spokesperson Ten Hasheela said.
According to the latest assessment by the ministry, the average price of unleaded petrol 95 in November was US$96,65 per barrel, marking a decrease of approximately US$1 per barrel or 1,02% compared to the end of October, when it was US$97,61 per barrel.
Furthermore, the average price of diesel 50ppm for November was US$105,45 per barrel, exhibiting a significant decrease from the end of October when it was US$117,35 per barrel.
This reflects a notable drop of about US$12 per barrel or 10,1% during the review period.
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Similarly, the average price of diesel 10ppm in November was US$106,08 per barrel, compared to US$118,15 per barrel at the end of October, indicating a noteworthy decrease of approximately US$12 per barrel or 10,1% over the review period.
Additionally, exchange rate data for the period from 1 to 24 November revealed a 3% appreciation of the Namibia dollar against the US dollar, with the exchange rate standing at N$18,49 per US dollar, compared to N$19,06 per US dollar at the end of October.
Taking into account all the input factors outlined above, Hasheela said the ministry observed substantial over-recoveries for both petrol and diesel products.
These over-recoveries amounted to N$2,21 per litre for petrol and N$1,90 per litre for diesel 50ppm, along with N$2,03 per litre for diesel 10ppm.
"The ministry is glad that market conditions have improved for price-takers such as Namibia, which have resulted in the decrease of domestic fuel prices," Hasheela said.
ROAD LEVY INCREASES
Meanwhile, Hasheela said the ministry decided to raise the Road Fund Administration levy in consideration of the significance in road maintenance nationwide.
The increase amounts to 20 cents per litre, shifting the levy from N$1,78 cents per litre to N$1,98 cents per litre for all products.
"The effective date and time for this adjustment is Wednesday, 6 December at 00h01," Hasheela said.
