Mmegi Online :: Fuel pump prices to remain stable
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Last Updated
Friday 18 January 2019, 12:49 pm.
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Fuel pump prices to remain stable

The Department of Energy says despite the recent rise in international oil prices it has sufficient funds in its coffers to continue cushioning the effects of the fluctuating commodity.
By Isaac Pinielo Fri 20 Jan 2017, 14:36 pm (GMT +2)
Mmegi Online :: Fuel pump prices to remain stable








In an interview with BusinessWeek, director of energy, Kenneth Kerekang said at the moment the department relies on the National Petroleum Fund (NPF), which he stated has adequate funds to provide the ‘exquisite’ cushion to the prices.

The National Petroleum Fund is used by government to pay petroleum retailers the difference between the administered and prevailing fuel prices.

“The value of the fund fluctuates depending on whether we have under or over recoveries resulting in either withdrawal from or payments into it,” Kerekang said. In October last year, the balance of the Fund was recorded at P600 million which according the energy officer, is meant to meet the engineering, construction and operational costs of the strategic petroleum product storage facilities for government fuel.

According to Kerekang, the government reviews prices on a monthly basis and adjusts pump prices if necessary in order to align them with international trends.

“Any decision by the government to adjust fuel pump prices will be communicated to the public after satisfying all the necessary procedures and processes,” he said.

Kerekang said factors that are taken into consideration to adjust local retail prices are the position of the national Petroleum Fund balance and unit rates movement.

Currently, the prices of unleaded petrol 93 and 95 is P7.49 per litre and P7.61 per litre respectively, while diesel 0.05% and 0.005%

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goes for P7.14 per litre and P7.19 per litre respectively. Paraffin costs P6.13 per litre.

The last time the energy department made an adjustment to the fuel prices was in April 2016, when pump prices were reduced.

Apart from stabilising retail pump prices for controlled petroleum products, the Petroleum Fund is also used to purchase petroleum product stocks for the government’s strategic oil storage facilities. The Fund is also meant to meet insurance premiums in respect of the insurance of government’s strategic oil storage facilities and stocks.

Payment into the Fund is done through all receipts from petroleum levies charged under the control of goods regulation.

The Fund also collects levy rate of 13.5 thebe per litre from the sale of both petrol and diesel grades on a monthly basis, as well as payments through over-recoveries. “It also gets income generated from the investment of the fund’s monies and any other money received from the government,” the energy department said.

Meanwhile, the US Energy Information Administration’s January Short-Term Energy Outlook (STEO) forecasts benchmark North Sea Brent and West Texas Intermediate (WTI) crude oil prices to average $53 per barrel (b) and $52/b, respectively, in 2017, close to their levels during the last three weeks of 2016. These prices are expected to rise to $56/b and $55/b, respectively, in 2018.

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