The Ministry of Mines and Energy (MME) announced on 5 November 2018 a fuel price increase of NAD0.50 per litre for petrol and NAD0.70 per litre for diesel countrywide with effect of 7 November 2018 midnight.
According to the MME statement, the price of refined petrol and of refined diesel remained stable compared to September at USD86 per barrel and USD95 per barrel. However, the Namibia dollar weakened from NAD14.40 in September to NAD 14.50 vis-à-vis the US dollar causing the cost of fuel in NAD to rise. In addition, the industry margin will be increased by 2 Namibia cents per litre.
A brief analysis:
The re-imposition of sanctions against Iran by the US Government beginning of November 2018 that target the financial, shipping and oil sectors are likely to exert further pressure on oil prices, since other OPEC member states might not be in a position to cover the shortfall. Furthermore, the winter in the Northern hemisphere will lead to rising oil demand for heating purposes. On the other hand, the Namibia dollar is currently stabilising against other major currencies, which could ease the price pressure.
The rising fuel prices will lead to higher transportation costs and over time to price adjustments for consumer products. The inflation rate will therefore continue to rise. On the other hand, local producers competing with imported products could gain a competitive edge due to shorter transport distances. Therefore, sourcing inputs and final products locally could help containing the upward price pressure.