04 February 2014, Windhoek – A reduction in oil output and the slump of the Namibia dollar against the US dollar have been cited by the Ministry of Mines and Energy as some of the reasons Namibians will have to fork out between 30 cents and 38 cents a litre more for petrol and diesel as of 00h01 on Wednesday morning.
Mines and Energy Minister, Isak Katali, said the prices for 95 Octane unleaded petrol will increase by 38 cents per litre, diesel 500 ppm will increase by 30 cents a litre and diesel 50 ppm will go up by 34 cents a litre. Katali however made clear that the ministry supports a fuel price that is kept at the lowest possible level so as not to disrupt transportation costs and as a result commodity prices in the country. Katali also noted that while crude oil prices in the oil region have been stable at the beginning of December, there have been clear signals of an increase in oil prices. “Not long ago, the uprisings in the Middle East pushed the prices of Brent Crude to over US$100 a barrel, just like that. Evidently, notwithstanding sporadic declines, oil prices have shown remarkable resilience boosted by speculative trading in the stock market. And, the story has just begun with Egypt under the spotlight in this saga,” explained Katali.
The minister also pointed out that oil production in South Sudan has slumped by about 15 percent since fighting erupted more than two weeks ago. He said this translates into a cut in production of more than 41 000 barrels per day to around 200 000 barrels per day. This represents a drop of between 15 percent to 20 percent compared to production levels before the fighting broke out. “This has led to a tremendous cut in output and thus the supply of crude from that country leading to an overwhelming increase in the price,” he said.
Another factor cited by Katali is the depreciation of the Namibia dollar against the US dollar, mostly due to labour tensions in the South African labour market. This unrest is threatening the prices of imports in the local market and the oil industry is not exempted from these adverse affects.
According to Katali this has led to slight under-recoveries in the local oil industry and when this happens fuel pump prices need to be adjusted upwards to compensate for the cost incurred by oil companies to bring oil onshore and to keep the country supplied with enough fuel.
– New Era