Windhoek-Fuel prices will go up by N$0.50 on the first hour of December 6, the Ministry of Mines and Energy has announced.
The ministry said the increase was due to the Organisation of Petroleum Exporting Countries (OPEC) cutting the supply of crude oil into the market to control prices, and the surge in the exchange rate between Namibian dollar against the US dollar, which has not been favourable to Namibia.
“Oil is priced in US dollar and the exchange rate during the period under review has played a major role. The Namibian dollar is pegged to the South African Rand, and whatever happens to the Rand directly affects our currency,” said the ministry in a statement.
Further, the downgrading of the sovereign credit rating for both Namibia and South Africa has brought the currencies of the two countries – whose economies are interlinked – under increasing pressure.
“A heavy depreciation was recorded during the month of November, from an average of N$13.7 in October to a whopping N$14.10 in November. This means that oil companies have paid more in terms of the local currency in November compared to October, to bring fuel to our shores,” said the statement.
During the period under review, the average price for a refined barrel of oil was US$73 for both, petrol and diesel. “This is US$5 higher than last month’s average of US$68 per barrel. This is a substantial increase within a short period of time and its impact on the price takers (oil-importing countries) is severe,” the statement explained.
OPEC, the largest oil cartel in the world, has struck an agreement to cut the supply of oil in the global market in order to control the price at which a barrel is sold. This was after oil prices crumbled in 2016, making it difficult for participants in the market to earn substantial returns on their investment, thereby halting some exploration at least until the situation gets better for them.
“The situation has gotten better for investors in the oil market, and worse for price takers. Oil prices have begun surging at a faster pace than the ability of net oil importers to contain them,” said the ministry in the statement.
The pump price for fuel at Walvis Bay will rise N$ 11.70 per litre for 95 Octane Unleaded Petrol, N$ 11.73 per litre for Diesel 500ppm and by N$11.78 per litre for Diesel 50 ppm. The pump prices for inland locations will change accordingly.