The Ministry of Mines and Energy has announced a price cut on Monday, which will reduce pump prices for petrol and diesel by N$1.20/l and 65 cents respectively for the month of September.
The ministry also announced that the temporarily reduced levies on all petroleum products, through the reduction of the NAMCOR Levy, road user charges and fuel tax by 50% and the MVA Levy reduced by 25% will remain the same until further notice.
Additionally, the Ministry has also resolved to increase the industry margin for fuel wholesalers by 20 cents per litre from N$1.08 cents per litre to N$1.28 cents per litre on all products effective from the 7th of September.
‘’The Ministry is, thus, hereby announcing that petrol prices will decrease by 120 cents per litre and the diesel prices will decrease by 65 cents per litre. The new fuel prices in Walvis Bay will thus become N$21.08 per litre for petrol and N$22.12 per litre for diesel. The fuel prices across the rest of the country will also be adjusted accordingly. These adjustments will become effective at 00h01 on 7th September 2022,’’ Mines and Energy minister Tom Alweendo said at a briefing on Monday.
According to Alweendo after entering the above input factors into the fuel pricing model, the Ministry recorded high over-recoveries on the two respective products, ‘’namely an over- recovery of about 300 cents per litre on petrol and an over-recovery of about 100 cents per litre on diesel. These over-recoveries are mainly recorded due to a significant decrease in the oil prices per barrel.’’ Meanwhile, Alweendo said that the possible return of sanctioned Iranian oil exports to global markets, coupled with the worries that the rising US interest rates would continue to weaken fuel demand, have been some of the contributing factors to the falling prices of crude oil over the last few weeks.
‘’Should the negotiating parties reach consensus on an Iran Nuclear Deal, this will entail that more oil will start flowing into the market and possibly cause prices to fall over the near-term.
However, the situation could prove problematic on the other side of the coin as falling US crude and product stockpiles have already started to add to the upward pressure on prices, as well as the possibility that OPEC and its allies will cut production to support an increase in prices for the benefit of crude oil suppliers,’’ he said.
The minister further share that as from 1 August 2022, the Ministry had resolved to start calculating the freight rates (shipping costs) into the Basic Fuel Price (BFP) based on the data published by REFINITIV between Walvis Bay and the three respective benchmark pricing markets, namely, Mediterranean, Arab Gulf and Singapore.
‘’The introduction of this freight pricing methodology comes into effect after the Ministry realized that most if not all petroleum products imported into Namibia are no longer emanating from South Africa, and thus the South African to Walvis Bay freight rate component in the old methodology is no longer warranted,’’ Alweendo said.
The latest calculations by the Ministry indicate that the average price for Unleaded Petrol 95 over the period of 01-26 August 2022 is at USD111.078 per barrel (compared to USD128.161 per barrel at the end of July 2022), a huge decrease of about USD17 over the review period.
‘’The average price for Diesel 50ppm over the period of 01-26 August 2022 is at USD 134.607 per barrel (compared to USD139.692 per barrel at the end of July 2022), a much lower decrease of about USD5 per barrel over the review period. Furthermore, the exchange rate figures for the period of 01-26 August 2022 indicate that the NAD has appreciated against the
USD at N$16.6557 per USD (compared to N$16.8437 per USD at the end of July 2022). This currency appreciation has a positive effect on the import parity price calculations and the local pump prices of fuel,’’ said Alweendo.