Business Reporter
THE Ministry of Mines and Energy has announced that, due to significant under-recoveries in both diesel and petrol, the ministry has resolved to increase the prices of petrol by N$1.20 per litre and those of diesel by N$1.70 per litre.
The effective date for these adjustments is Wednesday, 6th September 2023. The petrol price in Walvis Bay will thus be N$20.98 per litre, while the price of diesel 50 ppm will be N$20.75 per litre, and that of diesel 10 ppm N$20.95 per litre. Fuel prices across the rest of the country will be adjusted accordingly.
Explaining the circumstances around the fuel price release, Ministry of Mines Public Relations Officer Andreas Simon explained that in June, the Organization of the Petroleum Exporting Countries (OPEC) + members agreed to limit the global oil supply. As part of this effort, Saudi Arabia committed to an extra voluntary reduction in output for July, which would be further extended towards September. “This resulted in a persistent decrease in oil inventories. To that end, global oil demand is scaling record highs, boosted by strong summer air travel, increased oil use in power generation, and a surging increase in petrochemical operations in China. Consequently, the prevailing high oil prices are driven by excess demand coupled with a shortage of supply,” Simon said.
The average price of Unleaded Petrol 95 over August 2023 is at USD110.507 per barrel (compared to USD102.231 per barrel at the end of July 2023), indicating an increase of about USD8 per barrel or 7.8% over the review period. Additionally, the average price of Diesel 50 ppm over August 2023 is at USD118.128 per barrel (compared to USD100.231 per barrel at the end of July 2023), a significant increase of about USD18 per barrel or 18% over the review period. Moreover, the average price of Diesel 10 ppm over August 2023 is at USD119.249 per barrel (compared to USD101.712 per barrel at the end of July 2023), showing another significant increase of about USD18 per barrel or 18% over the review period.
Furthermore, the exchange rate figures for the period of 01 to 29 August 2023 indicate a 3.7% depreciation of the NAD against the USD at N$18.8443 per USD (compared to N$18.1889 per USD at the end of July 2023).
“Therefore, after entering the above input factors into the fuel pricing model, the Ministry recorded significant under-recoveries on petrol and on both diesel products, that is an under-recovery of 240 cents per litre on petrol and under-recoveries of 354 cents and 348 cents per litre on diesel 50 ppm and diesel 10 ppm, respectively. There is a pressing need to ensure that the fuel prices are best reflective of the market dynamics to ensure the efficient security of supply. Thus, due to the significant under-recoveries, the Ministry is hereby announcing that the prices of petrol will increase,” Simon concluded.
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