The Ministry of Mines and Energy announced that fuel prices will remain unchanged for February.
Commenting on the announcement, local economist, Klaus Schade stated that the slight increase in global oil prices combined with the appreciation of the Namibian Dollar against the United States Dollar has led to stable fuel prices in Namibia.
Schade further stated that based on the under-recoveries and over-recoveries per litre, the Namibia Energy Fund (NEF) has still subsidised fuel by N$1.28 per litre for petrol and N$1.42 per litre for diesel. However, whether the NEF has incurred a net loss or gained a net surplus over the period April 2018 to January 2019 depends on the volume of fuel sold.
“Leaving the fuel prices unchanged despite over-recoveries per litre in January could indicate that the NEF has still incurred a loss that the Ministry of Mines and Energy is trying to recover..” he explained.
Schade further stated that the two consecutive, substantial fuel price decreases in December 2018 and January 2019 and stable prices for February 2019 bring relief to not only motorists, but to all businesses and consumers at a time when the economy is still not gaining much momentum.
In particular the fishing and transport sector will benefit from more stable fuel prices since fuel accounts for some 29% and 24% respectively of their total input costs.
Transport inflation was the main driver of the inflation rate in 2018. Fuel prices for February 2019 are 3.7% (petrol) and 12.0% (diesel) higher than in February 2018. After double-digit inflation rates for transport from September 2018 to December 2018 we can expect a return to single-digit transport inflation for January and February 2019, which will ease overall inflationary pressure. Fuel prices (operation of personal transport equipment) contribute 9% to the overall inflation rate and have, therefore, an impact on the overall inflation rate.