By Petronella Sibeene
Favourable exchange rates and the reduction in international crude oil prices are set to benefit Namibian motorists as the Ministry of Mines and Energy announced yet another decrease in fuel prices, to take effect from midnight tomorrow.
This is the second announcement on fuel price reduction this year.
On 19 January this year, the price of fuel was slashed by 22 cents per litre for petrol and 12 cents per litre for diesel.
Permanent Secretary in the Ministry, Joseph Iita, said in a statement last Friday that the Walvis Bay fuel pump price for 93 Octane leaded replacement petrol (retail), and 95 Octane unleaded petrol (retail) will decrease by 14 cents per litre while diesel (wholesale) will go down by 6 cents per litre.
This means the new Walvis Bay pump price for 93 Octane leaded replacement petrol will be N$5.66 cents per litre while 95 Octane unleaded petrol will cost N$5.68 cents per litre. Diesel will go at N$5.90 cents per litre.
Pump prices at various inland destinations countrywide will also be adjusted accordingly.
Iita noted during the period of January to February 2007 that the average Namibia dollar to the US dollar exchange rate weakened slightly.
Despite the weakened average exchange rate coupled with rebounding crude oil prices from a record low, oil prices continued to hover at US$60 a barrel.
This has affected the Namibian unit over-recovery positively, which then further stabilized fuel prices in the local market.
Iita stated, “The Ministry of Mines and Energy would like to pass the benefit of over-recoveries accrued during February 2007 in the local market to the consumers to ease the burden imposed on them” – thus the price drop.
The current pattern of increasing demand for petroleum products, combined with decreasing crude oil prices, has led to an unsustainable level of profitability for refineries, and if demand holds, it should lead to an increase in crude prices in the near future.
According to Iita, it is worth noting that the favourable average exchange rate and the softening of the international crude prices could be short-lived as international crude oil prices keep bouncing up and down due to expectations in the market over the geo-political tension between the USA and Iran.
Expectations are mounting that Iran, one of the major producers of crude oil, may curtail its output anytime soon in retaliation for sanctions imposed as a result of its defiance to halt its nuclear enrichment programme.
“It is apparent that crude oil prices will remain volatile and the necessary precaution and due diligence need to be exercised in reviewing fuel prices to avoid a negative effect on the economy and the purchasing power of consumers during periods of heavy price shocks,” he said.