Most of Namibia's fuel is distributed throughout the country by road.Photo namcor.com.na
Most of Namibia's fuel is distributed throughout the country by road.Photo namcor.com.na

Fuel price down, levy increases

Motorists save N$1 per litre in Walvis Bay
Road-using fuel transporters now get 21,9% more to bring fuel inland to price point depots
Augetto Graig
As of midnight, Namibians across the country will pay less at the pump for their fuel purchases. How much less they pay for fuel depends on where in the country the fuel is being purchased. The Ministry of Mines and Energy has announced that petrol prices and both variants of diesel sold in Namibia have all been decreased by N$1 per litre.





In Walvis Bay, the price of petrol is now set at N$20.25 per litre, while diesel 50ppm now costs N$19.72 per litre, and diesel 100ppm is sold at N$19.82 per litre.





“However, it should be noted that the net decrease in fuel prices will vary from location to location, taking into account the cost of delivery of fuel implied by the introduction of the weighted fuel transportation rates,” the announcement from the office of the executive director in the Ministry of Mines and Energy reads.



INTERNATIONAL SAVINGS

The ministry explains that fuel prices internationally have been on a downward trend since June, with the decline in oil prices attributed to the lower cost per barrel of crude oil, which is forecast to continue in October. This is driven by slower economic activity, particularly in China, which has led to reduced global oil demand, the ministry elaborates.





Furthermore, the ministry points out that the Namibian Dollar has strengthened against the United States Dollar, trading at N$17.75 per US$1, compared to N$18.09 per US$1 in August. This has also contributed significantly to the reduction of imported oil products, which are traded in US currency on the international oil markets.





Recent calculations done by the ministry show that in September, the average price of petrol was US$82.849 per barrel, 8.49% less than the price from August. The price of diesel 50ppm was recorded at US$82.689 per barrel, 9.16% less than the previous month, and diesel 100ppm was recorded at US$82.878 per barrel, also 9.17% less than recorded in August.





This led to over-recoveries of almost N$1.32 per litre of petrol, N$1.23 for every litre of diesel 50ppm, and N$1.31 per litre of diesel 100ppm, the ministry said.



PUMP PRICE MAKE-UP

However, Namibians do not only pay for the costs of fuel imports when filling up at service stations across the country, as the pump price also includes road user charges administered by the Road Fund Administration to help maintain and improve the country’s excellent road network. In this respect, the ministry has decided to increase road user charges by 25 cents per litre, from N$1.98 to N$2.23 per litre.





In addition, the ministry has decided to introduce a weighted fuel transportation rate to cover the costs of transporting fuel from the import port of Walvis Bay to towns around the country. The weighted fuel transportation rate replaces the current rail rates applicable for fuel transported between Walvis Bay and inland fuel pricing depots located in towns where the national rail carrier TransNamib is supposed to deliver fuel from the harbor.





TransNamib recently acknowledged that it is currently only able to supply fuel from Walvis Bay to Windhoek, Otjiwarongo, Tsumeb, and Ondangwa. Destinations including Gobabis, Keetmanshoop, Mariental, Oranjemund, Lüderitz, Okahandja, and Otavi cannot be supplied by TransNamib due to a variety of reasons, including decrepit rail infrastructure and shortages of locomotives and fuel wagons. As a result, these price points are serviced by fuel trucks, which also carry fuel from the designated price points to final destinations like Talismanis, near the border with Botswana.



FUEL TRANSPORT RATES

The costs of transport from price points to outlying towns are covered out of the levy on pump prices and reimbursed to road-using fuel transporters. However, the rail rate for the transport of fuel from Walvis Bay to Okahandja, for example, was not sufficient to cover the costs for the fuel trucks that replace fuel trains to such price points. As Abednego Ekandjo, chief petroleum economist in the ministry, elaborates: “It costs a different amount to transport fuel by road, and it also costs a different amount to transport fuel by rail, so we are then weighting these two based on the volumes that are transported by these two various modes. The final results are what we call the weighted fuel transportation rates. In terms of verifying the correct amounts (to be paid at the pump) per location, consumers can reach out to the Ministry of Justice, Government Gazette Office, because these prices are published in the government gazette,” he said.





With the introduction of the weighted fuel transportation rates, the ministry says greater parity and fairness will be achieved. “On average, the weighted fuel transportation rates are about 21.9% higher than the current rail rates, entailing a general increase in the local fuel transportation costs. These changes are effective as of 2 October 2024,” the announcement states.

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Namibian Sun 2024-11-21

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