Fuel price drop won’t decrease cost of food
• BY ERASMUS SHALIHAXWE
AN economist in the Ministry of Mines and Energy’s Petroleum Affairs directorate, Abednego Ekandjo, has advised the public not to expect commodity prices to drop because fuel prices have been revised downward.
The ministry announced on Monday that petrol price will decrease by 120 cents per litre and
65 cents per litre for diesel effective from midnight of September 07 and it will now cost motorists N$ 21.08 per litre for petrol and N$ 22.12 per litre for diesel.
Ekandjo made these remarks while responding to media questions on whether commodity prices were also going to decrease, since they had sky-rocketed after fuel prices went up and that upward trajectory was said to be in relation to high fuel costs, the COvid-19 pandemic which disrupted global distributed chains and the conflict in Ukraine.
Most of the time when petrol prices increase, commodities prices also increases due to the fact that logistics and transport companies charge extra to transport imported goods from South Africa and other countries.
He said for food and other goods price to drop, the Namibian dollar should perform better at the exchange rate with the American dollar.
“If a barrel of crude oil price can go back to around U$ 50 or U$ 60 per barrel, it will then push the fuel price in the country to the levels of around N$ 12 or 13 per liter, then that way, food and other goods prices can drop also”, the economist theorised.
“If you look at the beginning of 2021, fuel prices at that time were around N$ 13 per litre. So at the current level, it is as if fuel prices have almost doubled”, he stated.
“In terms of exchange rates, if we can go back to maybe something like N$ 13 per U$ 1, that can also work. So if those factors can really fall into place and also the shipping cost can decrease significantly, then we might end-up with prices that have a very big positive effect on consumer goods and services,” Ekandjo remarked.
Minister of Mines and Energy, Tom Alweendo, said there was a bit of stability in the market and this resulted in a reduction on the crude oil and fuel itself.
“If you can recall about six months ago, the crude oil to a barrel was about U$ 116, as of today that
price is at U$ 93, that is about 25 percent decrease. We are hopeful that this will also filter into the price of refinery products. Hopeful we will have a consistent decrease in fuel prices and get to what we call normal price,” Alweendo noted.
He added that Namibia cannot be considered to have the highest fuel price compared to other neigbouring countries in the SADC region.
“I recently came from Johannesburg (South Africa) and the price of petrol is ZAR 26 per litre and 27 for diesel per litre. We are not the highest fuel price within the region, but we are not saying it’s not high, it’s still high. So we are hoping for a downward so we can get below N$ 20 per litre,” Alweendo stated.
Hilma Ishuna who owns a tuck- shop in Okuryangava that sells various groceries, said she gets her stock from Metro supermarket where the price is affordable, and she wished for the
price of commodities to also drop like that of fuel.
“It’s good for those that own cars, but for us passengers… the transport fare did not change. I would appreciate it when fuel price go down together with commodity price. Because when they increased fuel price they said it was because fuel, so they should do the same with commodities now,” expressed Ishuna.
Richard Mzimba who has been driving a taxi in Windhoek for the past fours years, said fuel price
drop is a welcome relief but it is not something worth celebrating because it does not make a significant difference.
“If the price can go back to where it was three or four years ago, then I can celebrate because I know I will make a better profit,” Mzimba stated.