Why fuel prices increased so hefty……….?

Although all international factors played out positive for cheaper fuel globally, the opposite was the reality for Namibia and that resulted in a 60 cents per liter increase in petrol prices on Wednesday and 30 cents per liter for diesel.

On international markets the demand for oil dropped, as the world economy continues to slow down as the Covid-19 pandemic rears it ugly head many countries again. Under normal economic conditions that means cheaper fuel imports.
Similarly the United States- and Chinese economies’ fuel demands dropped as economic activities slowed down.  This resulted in an oversupply of fuel on markets globally, but according to a statement by the Namibian Ministry of Mines and Energy on 27 August, fuel is still delivered to the consumer in Namibia at a loss of 101 cents per litre and for diesel the figure is 42 cents loss per liter.
The National Energy Fund must subsidise these losses, better known as under-recoveries. A fuel price increase is the only way to cushion these losses in the weeks and months ahead.

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