THE Economic Association of Namibia has cautioned consumers, oil producers and policymakers not to become complacent because oil prices are decreasing. Instead, they should continue embarking on more fuel-efficient transport, production equipment, and further move to electrical vehicles and equipment.
The EAN's analysis comes after the mines and energy ministry on Friday announced that fuel pump prices will decrease by N$1 per litre for petrol and 40 cents per litre for all diesel grades, effective from 5 December 2018. This means fuel prices at Walvis Bay will now be at N$12,95 per litre for petrol; N$14,08 per litre for diesel 500ppm; and N$14,13 per litre for diesel 50ppm. The prices for the rest of the country will be adjusted accordingly.
In the EAN analysis released last Friday, research associate Klaus Schade said once consumers, producers, and policymakers use fuel-efficient transport, it will not only reduce Namibia's dependency on oil imports, but would also support the country's 'Growth at Home' strategy by harnessing the country's natural resources such as solar, wind and biomass to generate electricity.
“Policymakers need to take the initiative to design a joint strategy to promote the use (and production) of electrical vehicles, not only in Namibia, but in the southern African region. Namibia and the southern African region at large are rich in lithium and cobalt, the main inputs into the production of lithium-ion batteries that power electrical vehicles. Instead of exporting the minerals as raw materials, policymakers need to design a strategy to add value to the minerals, and produce the batteries in the region,” he urged.
Schade added that the fuel price decrease is good news as it is providing the much-needed relief to Namibian producers and consumers who have to cope with the slow economic recovery and increasing inflation.
“It will ease the burden on the consumer during the upcoming festive and holiday season. The drop in fuel prices is more generous than the previous under-recoveries would have suggested. However, the current drop in oil prices highlights once more the volatility in the global oil market that is influenced not only by the performance of the global economy, but also by geopolitical factors such as the tensions in the Middle East,” the research associate added.
Mines and energy minister Tom Alweendo said fuel consumers in the country had to tighten their belts to cope with exchange rate uncertainties and the oil supply cuts introduced by the Organisation of Petroleum Exporting Countries (Opec) earlier in the year, which took full effect at the beginning of May.
“The ministry, through the National Energy Fund, is continually pulling in the same direction with the fuel consumers by ensuring that the full costs of oil supply are at no point passed on to consumers,” the minister said.