Fuel prices remain unchanged

Floris Steenkamp

National Energy Fund strong enough to “cushion” high fuel prices for the month of April

Namibia’s National Energy Fund (NEF) has a healthy financial position and is adequate too subsidise fuel prices in Namibia for the month of April.

This was the Ministry of Mines and Energy’s message on Wednesday, confirming in a statement as a result of this healthy balance, fuel prices will re-main unchanged for the month of April. The NEF will absorb [subsidise] the current under recovery of 56,179 cents per litre for 95-octane petrol and 27,668 cents per litre for diesel.
An under-recovery means it costs more to import fuel than the price the consumer pays at the pump. This negative difference can only be cancelled out by two means: either to increase fuel prices to compensate for the loss (achieve and over-recovery) or subsidise the shortfall.
Namibia’s Mineral Energy Fund is replenished by a NEF-levy per litre of fuel sold in Namibia and in hard times these accumulated funds are used to subsidise fuel prices to prevent it from becoming unsustainable economically for the fuel consumer to absorb.
Global market forces that created the current under-recovery position were presented by the Ministry of Mines and Energy as rising crude oil prices, the depreciation of the South African Rand against the United States (US) Dollar and a global economic slowdown.
Crude oil market prices increased at the backdrop of the Oil Producing Export Countries (OPEC) and OPEC plus allies like Russia cutting crude oil production to create market short-ages and subsequent price per barrel in-creases on the markets.
The political crisis in Venezuela severely paralyses the country’s crude oil exports (coupled with an ageing and neglected national oil production infrastructure), creating further sup-ply shortages.
Ongoing sanctions against the Islamic Republic of Iran, and forecasts that already limited oil exports from Iran will be further curtailed by the Trump-administration, adds to global supply woes and rising crude oil prices.
High crude oil prices mean higher petroleum prices after crude has been produced into fuel pro-ducts.
The global economic slowdown, most perceivable in China, the US and Europe forces many large investors to hedge into main-stream trade currencies like the US Dollar, pushing it aggressively against emerging market currencies like the South African Rand (ZAR) which is the currency for the purchases of petroleum products for the Namibian market.
The South African Rand this week traded at well over N$14,60 per US Dollar, a bleak feature for any importer.
Fuel pump prices at Walvis Bay will therefore remain at: N$12,05 per litre for 95-octane petrol and N$13,13 for diesel.

Nat

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