Oil prices have risen to the highest historical levels because of rising global oil prices fuelled by the war between Russia and Ukraine.
Non-oil producing countries such as Namibia are price-takers and can only adjust their prices according to the prevailing prices.
Crude prices jumped to just over 100 US dollars a barrel the highest since 2014 after Russia invaded Ukraine last week.
Andrease Simon, spokesperson for the Ministry of Mines and Energy, says that while current oil prices appear to be unsustainable, the Namibian nation must remain strong to survive because it has found itself in a very difficult global oil market environment.
The ministry has hiked fuel prices as of Wednesday, March 2. Petrol prices will rise by 120 cents per liter, while diesel prices will rise by 130 cents.
The new fuel prices in Walvis Bay per litre will be N$17.15 for petrol and N$17.28 for diesel.
The prices across the rest of the country will also be adjusted accordingly. These adjustments will become effective at 00h01 on 2nd March 2022.
The Government, through the National Energy Fund (NEF) will pay over N$143 Million for under recoveries recorded.
This month, petrol prices only increased by 30 cents and diesel prices 40 cents. Members of the public are encouraged to report any breach of this order, to the (Regulator) Ministry of Mines and Energy.
These sharp increases in crude oil prices of about USD11 per barrel in a matter of a few weeks, a clear indication of where the oil market is headed to.
Furthermore, the exchange rate figures for February 2022 indicate that the NAD has recorded yet another appreciation against the USD at N$15.2004 per one USD (compared to N$15.4861 per USD during January 2022).
This positive exchange rate, however, was hugely suppressed by the sharp increase in the oil price.
Therefore, after adding the above input factors into the fuel pricing model, the Ministry recorded a couple of very large under-recoveries on both products, namely 146 cents per liter on petrol and 160 cents per liter on diesel.
The Ministry in a statement says it was required to make hard deaths each year.
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