Fuel prices to increase Wednesday
01 Jul 2016 15:50pm
OSHAKATI, 01 JUL (NAMPA) Motorists will have to pay more for fuel as of Wednesday.
The Ministry of Mines and Energy (MME) said on Thursday the petrol and diesel will increase by 30 and 50 cents, respectively on 06 July.
This means pump prices at Walvis Bay for unleaded petrol (ULP) will be N.dollars 10.94 per litre; N.dollars 10.62 per litre of diesel 500 parts per million (ppm); and N.dollars 10.67 for diesel 50 ppm. Inland pump prices would be a little higher.
The statement quotes Minister of Mines and Energy Obeth Kandjoze as saying the increase comes as a result of the 38.6 million barrel fall in the Saudi Arabian oil inventories since October, taking storage down to 290.9 million barrels; a two-year low.
Barrel prices for refined oil are approaching about US.dollars 60 on all regulated hydrocarbons, whereas the basic fuel price unit rate slate calculations for the past month recorded under-recoveries on all the regulated petroleum products, he said.
The minister added that the recorded under recoveries is what sparked the pump price increases, even though the energy fund will also be footing some of the bill.
The under-recoveries recorded are sufficient to trigger an increase in local pump prices; however the National Energy Fund (NEF) will have to absorb about N.dollars 0.04 per litre for ULP and N.dollars 0.28 per litre for both diesel grades for these under-recoveries by compensating fuel importers to spare motorists the full cost of the price increase.
Investors and economists have been on the edge of the seat regarding the price of oil on the international market since oil producing countries have agreed to not reduce their output, which increased supply and during early 2016 dropped the price of oil per barrel to under US.dollars 50.
Last Thursday, Britons voted to exit the European Union, which challenged the value of the British Pound against the US dollar and cast uncertainty over the global market, coupled with political instability in Venezuela, a drop in output from Nigeria and oil workers striking in Norway. All these factors combined with many others have restored confidence in the price of oil reaching the US.dollar 50 benchmark and possibly reaching the desired US.dollar 70.