Namibia in Numbers: Namibian fuel prices

FOR most of the past three to four years, Namibian fuel prices have ranged between N$20 and N$25 per litre, approximately double their typical levels prior to the Russia-Ukraine war.

A key responsibility of the Ministry of Industries, Mines and Energy is the management of the National Energy Fund (NEF), which plays an important role in cushioning fuel price shocks in Namibia.

The NEF oversees the slate account, which operates between the government and suppliers of petroleum products. It attempts to balance discrepancies between Namibian pump prices and international fuel import costs, expressed as under- or over-recoveries.

Given the extreme volatility of international oil prices, the NEF helps stabilise fuel prices for Namibians. In effect, it aims to shield consumers from sudden increases in international prices by absorbing some or all of the costs of under-recoveries.

However, when international prices are both high and sustained, the NEF’s capacity to cushion these shocks is weakened. A depreciation of the Namibia dollar further reduces this capacity as it increases the cost of imports. An increase in relevant levies can also sometimes translate to a higher fuel price.

Pump prices are always quoted at Walvis Bay, as this is the starting point, and the cost of distributing fuel across Namibia varies depending on the distance from the port.

However, the price for all other locations across Namibia is determined using weighted pricing and equalisation principles (thus it is not a linear relationship), to not overburden areas further inland.

*Tannan Groenewald is the head of data and analytics at Cirrus Capital.

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