Fuel prices skyrocket amid global oil tension

Niël Terblanché

The Ministry of Mines and Energy in Namibia has announced a significant hike in fuel prices that will come into effect tomorrow, 3 April 2024, marking a steep increase for motorists and industries alike.

According to the ministry, the price of petrol will increase by 152 cents per litre and both types of diesel by 72 cents per litre.

Prices at the pumps in Walvis Bay will henceforth be N$22.30 per litre for petrol and N$21.77 per litre for diesel.

The ministry said the sharp increase has been attributed to a mix of global and domestic factors, including geopolitical tensions affecting oil markets and under-recoveries in both petrol and diesel prices.

Namibia, along with other nations, has felt the pressure of fluctuating global oil prices, which have been on an upward trend due to reduced supply and ongoing geopolitical strife.

These challenges are compounded by a notable decrease in operational drilling rigs, adding to the uncertainty in the oil production sector.

The average price of unleaded petrol 95 has risen by 2.70 percent during the review period, and while diesel prices have seen a slight decrease, the cumulative factors have led to a necessary adjustment in fuel pricing models.

The Ministry has also recorded significant under-recoveries on both petrol and diesel products, amounting to an under-recovery of 277.962 cents per litre on petrol and varying under-recoveries on diesel.

These figures have necessitated the sharp price increment, despite a 0.93 percent appreciation of the Namibian Dollar against the US Dollar.

In response to the under-recoveries and lining up with the adjusted Namport levy, the Ministry is compelled to increase the fuel prices to mitigate the impact on the National Energy Fund.

While the Namport levy itself will see a minor increase of 2 cents per litre, the combined factors have led to a substantial price adjustment.

This increase will undoubtedly have ripple effects across the economy, impacting everything from the cost of commuting to the price of goods and services.

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