• Andreas Simon

On 5 August 2020, at 12:00AM Midnight, fuel pump prices in Namibia increased countrywide. The prices of Petrol increased by 100 cents per litre and the prices of Diesel increased by 70 cents per litre. The fuel pump prices in Walvis Bay (port of entry) are now recorded as; N$11.35 p/l on Petrol and N$11.83 p/l on Diesel. This was made public on 31 July after the Minister #TomAlweendo informed the public in an official media release.

A few reasons why fuel prices had to be increased.

1. In July 2020, the Ministry recorded an under-recovery (which is a loss), of 204,206 cents (which is N$2.00) p/l on petrol and 164,936 cents (which is N$1.64) p/l on diesel. This came about because fuel was bought at a higher cost than the local set price for landing known as the BFP (Basic Fuel Price). This means that the prices for fuel have gone up causing fuel prices for August to increase.
2. Even more, for the initial N$2.00, which the consumer had to pay for petrol, the MME only carried over N$1.00 to the consumer of which the remainder N$1.00 is paid by the NEF (National Energy Fund). In addition, on the N$1.64 for diesel, the Ministry decided to carry only 70 cents over to the consumer whilst 94 cents is covered by the NEF. This decision was taken in order to equalize the price for fuel by allowing the consumer to carry some of the cost.
3. For the past months since June 2019, there were some under-recoveries and those under-recoveries (loses) have been taken up by the NEF and were never carried over to the consumer – that is why fuel prices never went up. Even though it sounds “OK” in principle, such a practice is not healthy for the Energy Fund.
4. Fuel prices for August had to be increased in order to ensure security of supply. Usually, it is realised by making sure that our local fuel prices are reflective with the international market. Meaning, local fuel prices must be kept close to international prices because it helps the importer(s) to negotiate for better prices as the BFP is the benchmark for one to reach at a meaningful price.
5. Namibia just stepped out of a countrywide lockdown that was imposed due to COVID-19. We are now seeing more vehicles on the road. This means that the demand for fuel has gone up and where there is demand, prices should be expected to go up meaningfully, whilst considering the current economic condition of the country.

With that said, it important to stress that the Ministry of Mines and Energy reviews fuel prices every month taking into account the need to ensure the orderly importation of fuel products into the country.