Fuel prices remain unchanged for July
30 June 2020 | Energy
According to the minister, the monthly fuel price review revealed an under-recovery on Diesel 50ppm of -141.673 cents per litre on the Basic Fuel Price (BFP) “import parity price” landed in Walvis Bay as was calculated on 25 June 2020.
“Under normal circumstances such under-recoveries would have warranted for an increase in pump prices. However under the prevailing economic hardship conditions, the ministry decided to keep fuel pump process unchanged for July 2020. The fact that the under-recoveries have found the National Energy Fund (NEF) in a healthy financial position and the fund will thus absorb the under-recovery in its entirety on behalf of local fuel consumers,” the minister said.
The minister explained that after the oil price crash in April the global oil market had started to pick itself up with countries beginning to open up their economies following the lockdowns in March owning to the Covid-19 pandemic.
“As a result demand for oil has stated to surge and so have the prices of various petroleum products. On average the price per barrel for petrol and diesel increased from US$32 and US$44 respectively in May, to US$44 for both products in June 2020. This is a net increase of roughly US$12 from the prices of the previous month.”
The minister also pointed out that the exchange rate between the Namibian Dollar and the US Dollar has been relatively favourable during the period under review.
“It appreciated from an average of N$18.15 in May 2020 to N$17.01 in June 2020.”
This appreciation in the local currency was however not strong enough to off-set the corresponding increase in the international price of oil and diesel. Filtered through the local Basic Fuel Price (BFP) model, significant under-recoveries were recorded.
“Government is mindful of the fact that the economy is still bleeding due to the effects of Covid-19. The National Energy Fund will this month absorb the full under-recoveries recorded and the ministry will monitor the market in the months ahead to assess how best the prevailing pump process can be brought on par with the market price as market forces currently dictate,” said the minster.