Namibia will see some relief in the cost of transportation as the Ministry of Mines and Energy lower fuel prices yesterday.
"The ministry has been conscious that consumers have, in prior months, borne the adverse impact of higher oil prices.
"The current observed decline in global oil prices presents an opportunity for this respite to be passed on to consumers," the ministry says in a statement released yesterday.
The petrol price will be 80 cents less per litre, diesel 50ppm will decrease by 60 cents per litre, and diesel 10ppm will be 70 cents cheaper per litre.
The price of petrol at Walvis Bay will be N$22,20 per litre, diesel 50pm will be N$21,57 per litre and diesel 10ppm will be N$21,67 per litre.
The new prices will kick in tomorrow.
Economist Josef Sheehama says the reduction is a welcome development for both consumers and businesses.
"This is particularly good for those in the manufacturing, construction, agriculture and mining industries, whose output heavily depends on diesel fuel," he says.
Sheehama says the Namibia dollar has strengthened against the United States (US) dollar and the country is approaching its target inflation rate.
These are the main reasons for the drop in fuel prices, he says.
"Lower fuel prices will mostly help Namibians who own cars, because their monthly transportation costs would be slightly lower," Sheehama says.
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He says consumer prices may also be lower, since input costs would not be adversely affected.
"This is especially true, considering our prediction that the rate of increase in electricity prices would outpace the inflation rate," Sheehama says.
The ministry says it has observed an over-recovery of 120,8 cents per litre on petrol and over-recoveries of 96,3 cents on diesel 50pm and 111,9 cents per litre on diesel 10ppm.
"For Namibia as an oil-importing country, there is a pressing need to align fuel prices with market dynamics to ensure an efficient security of supply.
"As such, analysis of the petroleum activities return, which assesses returns on investment, indicates that increasing the industry margin by 23 cents to 189 cents per litre is necessary," the statement says.
It says the adjustment is crucial for oil companies to maintain a fair return on their investments.
Additionally, the ministry has increased the dealers' margin for service station operators by 9 cents per litre to 192 cents per litre.
This means the total profit made by service station operators has increased to 192 cents per litre.
Furthermore, the ministry will increase road rates by 15%, which is essential for facilitating the distribution of fuel to various parts of the country.
