Tank: All eyes on the new fuel prices

The Ministry of Mines and Energy is expected to announce the new fuel prices today for the month of April 2022. This will be the third fuel price announcement in 2022.

In February, the ministry increased the price of petrol with 30 cents per litre, while diesel increased by 40 cents per litre.

This month, motorists paid N$1.20 per litre extra for petrol and N$1.30 per litre for diesel, bringing the fuel pump prices to a record high in Namibia. Last year, fuel prices increased eight (8) times.

Local analysts expect fuel prices to continue increasing due to geopolitical tension in the oil producing regions, putting a further burden on consumers disposable income.

Worth noting, fuel is a key input in various industries of the economy, thus, prices of other goods and services are likely to rise as well.

Currently, the price of petrol at Walvis Bay, which is the port of entry, stands at N$17.15 per litre and N$17.28 per litre for diesel.

According to the Namibia Statistics Agency (NSA), the 4.5% overall annual inflation rate recorded in February 2022 was mainly driven by the transport category, contributing 1.8 percentage points.

Annual inflation for transport stood at 13.2% in February 2022, compared to 0.2% recorded in February 2021, an increase of 13 percentage points. The operation of personal transport equipment sub category, which captures fuel, was the main driver of inflation in the category recording a rate of 18.5% in February 2022.

The transport category has a weight of 14.3% in the Namibian Consumer Price Basket. This implies that, on average, households spend about 14% of their budget on transport.

South Africa

Meanwhile, South Africa’s Parliament's Portfolio Committee on Mineral Resources and Energy has proposed that Mineral Resources and Energy Minister Gwede Mantashe and Finance Minister Enoch Godongwana consider introducing a temporary tax holiday on South Africa's fuel products to ease pressure on South Africans facing fuel price hikes.

The committee resolved to propose the intervention on Tuesday, following growing upward pressure on the price of fuel, including the continued conflict between Russia and Ukraine. The war has driven oil prices to a high of US$130 a barrel.

This comes after Godongwana told a plenary of Parliament's National Assembly last week that government intended to shield South Africans from a spike in fuel prices. The minister said National Treasury was in "sensitive discussions" about this, with plans to "take some immediate steps for April and May".

Committee chair and ANC MP Sahlulele Luzipo told Fin24 on Tuesday that the committee resolved to send the proposal formally to both ministers for consideration. He said the structure and modalities around such a tax holiday would be left to the minister to decide.

"It's directed to the minister in his engagement with his counterpart at National Treasury. They must determine the process but no one doubts the emergency of the situation right now," said Luzipo.

Earlier this month, the Automobile Association projected that petrol and diesel prices currently look set for record increases in the first week of April.

The association's data suggested that 95 octane petrol is set to increase by R2.15/l, while 93 octane is expected to climb by R2.07/l, diesel by between R2.94/l and R3.08/l and illuminating paraffin by R2.51/l, with little to cushion the blow on South African households. -Additional reporting by Fin24/Bloomberg