Windhoek-Newly appointed Minister of Mines and Energy, Tom Alweendo, on Friday confirmed that fuel pump prices for March 2018 would remain unchanged at around the N$11.70 per litre mark. The stability in the fuel price has mainly been attributed to bearable oil prices, which are lingering at around US$75 per barrel, as well as a strengthening Namibia dollar against the US dollar, which is the strongest it has been in the last three years at N$11.80 during February.
“Although refined crude oil prices are still hovering above US$75 per barrel, a situation sustained only by the OPEC agreement to cut supply in order for some members to balance their budgets, the month of February has not been bad for net importers of oil, like Namibia. The prevailing prices are relatively bearable and we can only add our hopes to those of other importers, particularly in the SACU region, that prices remain stable below the US$80 per barrel threshold for the sake of local fuel pump prices,” said Alweendo in Friday’s statement.
He further noted that oil being priced in US dollar, coupled with political events in South Africa, meant that a strengthening currency played a major role during the month. Following the ousting of former president Jacob Zuma in South Africa, an appreciation in the Namibia dollar was recorded from an average of N$12.40 in January to a favourable N$11.80 in February.
“This means that oil companies have paid less in terms of the local currency in February compared to January to bring fuel to our shores,” said Alweendo.
He also announced an increase in the dealer margin for service stations of 3 cents per litre, effective from March 7. However, this adjustment will not affect end-consumers at the pump as it will be offset by recorded over-recoveries in the pricing mechanism.
“After the completion of the 2016/17 Dealer Margin Survey, that reviews, annually, the operating cost of a service station against their gross revenues, it was revealed that service station owners incurred higher costs than they should have and are, therefore, making less profit. This is caused by a combination of increasing overhead costs, stagnant sales volumes and inefficiencies on their part,” Alweendo explained.