No relief for taxi users although fuel price goes down

THE new year has started on a very positive note for car users, with Government announcing that the price of petrol will drop by 70 cents a litre and diesel by N$1,10 a litre on Wednesday.

It is the sixth month in a row that the price of fuel has gone down, but bus and taxi fares are not likely to see a decrease anytime soon.
Nabta President Magnus Nangombe told The Namibian that the cost of other items such as tyres was still too high to consider dropping bus and taxi fares at the moment.
‘Yes it is the sixth time that the fuel price drops but in the past we have waited for up to six times before increasing our prices when fuel was going up. If we reduce now, we will do more harm to ourselves,’ Nangombe said.
According to him, it will not be wise to reduce bus and taxi fares as there is no guarantee that the fuel prices will stay low.
The Minister of Mines and Energy, Erkki Nghimtina, announced on Friday that the new pump price for unleaded petrol at Walvis Bay will be N$5,67 a litre while that of lead-replacement petrol will be N$5,63 a litre. Diesel will cost N$7,00 a litre.
Pump prices at inland destinations countrywide will be reduced accordingly. This means that in Windhoek, the pump price for unleaded petrol will fall to N$5,87 a litre, lead-replacement petrol to N$5,83 a litre, and diesel to N$7,20 a litre.
Last month drivers in many parts of the country were able to fill their tanks for less than N$7 per litre for the first time in over a year.
Nangombe said the drop was good in view of the current economic meltdown, as it will relieve the financial pressure consumers have been experiencing.
‘At the moment public transport trips have become less because people are counting their cents. In fact, having public transport is not economically viable at the moment. We can’t replace old vehicles because of the high maintenance cost,’ he said.
Nghimtina said the increasing impact of the global economic downturn has led to a decrease in energy demand and a rapid and substantial reduction in crude oil prices to below US$40 per barrel.
It was at over US$147 per barrel at a stage last year.
The falling price of crude oil has decimated Opec’s income and member countries seem to be suffering the worst as a the demand for crude oil has slowed down in the face of the global economic downturn.
Falls in demand in the United States, the world’s top energy consumer, and other industrialised countries have helped drive prices down from a record peak of more than US$147 a barrel.
Nghimtina said an Opec emergency meeting in Algeria agreed to cut its output by more than two million barrels a day from January 1 this year in an effort to prop up the falling crude oil price.
This brought the total reduction in Opec output to 4,2 million barrels per day since September 2008.
Opec accounts for 40 per cent of global oil production but the cut in output failed to stop prices from declining.
Nghimtina said it is clear that oil prices will remain volatile and necessary precaution has to be taken in reviewing fuel prices to avoid negative effects on the economy.
For now, he said, the Ministry has decided to pass on the benefit of over-recoveries accrued in the local market in December to the consumers.
Fuel prices went up seven times last year because of the sharp increase in crude oil prices. Since August, however, the Ministry has decided to cut fuel prices each month.
As a result of the price increases, transport fares went up too, with taxis in Windhoek now charging N$7,50 per trip.