Fuel Prices Might Drop

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By Petronella Sibeene WINDHOEK Namibia is likely to benefit from oil price reductions should speculation in neighbouring South Africa, that prices for all types of fuel would drop by 37 cents by the first week of September, become reality. Commenting on the latest developments, Minister of Mines and Energy, Erkki Nghimtina, in an interview with New Era yesterday said the possible reduction in fuel prices would be good news for Namibian consumers who pay almost N$7.00 per petrol litre. During the 86th ordinary general meeting in South Africa, Governor of the SA Reserve Bank, Tito Mboweni, in his address stated that he had noted the increase of oil to almost US$80 per barrel in recent weeks but considering a stable rand and international product price basket until yesterday, it would translate into an oil price reduction of roughly 37 cents, likely to become effective on September 6. Given a potential easing of geopolitical threats in the Middle East, fuel prices are in the medium term likely to reduce by September. Some analysts have speculated that international oil prices are likely to moderate as oil demand is expected to decline. “We will benefit if the price goes down. Things will then improve,” said Nghimtina. The minister also revealed that reduced fuel prices locally would largely depend on the time and at what cost Namibia will purchase the fuel from South Africa. The minister also cautioned about how long tensions will ease in the Middle East. He maintained that oil price trends would always be determined by the situation in the Middle East. Two weeks ago, the Ministry of Mines and Energy announced its sixth fuel price hike that took effect on 17 August 2006. The last increase meant the retail price for lead replacement petrol (LRP), unleaded petrol (ULP) and the wholesale price for diesel went up by N$0,50 cents. At Katima Mulilo and Rundu, motorists currently pay N$6.66 for a litre of LRP (93) and ULP (95) while N$6.68 a litre is paid for a litre of diesel. At Oshakati, LRP (93) now costs N$6.67 while diesel sells for N$6.73 per litre. In Windhoek where there are more vehicles LRP (93) costs N$6.59/litre, ULP (95) goes at N$6.61 while diesel costs N$6.68. At Walvis Bay the prices of the same are N$6.44, N$6.42 and N$6.50 per litre respectively while at Noordoewer in the far south, LRP (93) costs N$6.80/litre, ULP N$6.82/litre and diesel N$6.88. Lately, Namibia has been in a better position compared to its neighbour South Africa where ULP (95) was in July at six percent higher than in Namibia and LRP (93) was 2.9 percent higher. Considering that the Ministry of Mines and Energy is the custodian of setting fuel prices in the country, it has no choice but to find ways of coping with all the international crude oil price changes. Minister Nghimtina had then announced: “It should be emphasised that although the ministry endeavors to keep fuel prices to the bare minimum as it has a huge impact on the economy of the country, it will harmonize fuel prices with neighboring states to be fair in respect of pricing mechanisms used.” Nghimtina said Namibia is at the mercy of oil producing countries and it has no influence on fuel prices considering it neither produces nor refines oil.