High pressure mounts on fuel prices
Mbongeni Mguni | Friday March 20, 2026 13:20
The Botswana Energy Regulatory Authority (BERA) maintains a slate, which is a formula calculating the costs involved in supplying and distributing various forms of fuel within the country. Every month, BERA looks at the movements of the various factors in the slate to gauge whether pump prices are “under-recovering” or “over-recovering”.
Both terms refer to whether pump prices are above or below the costs involved in bringing and distributing the fuel throughout the country, which determines whether pump prices increase or decrease.
On Wednesday, authoritative insiders in the industry told BusinessWeek that the outbreak of war in Iran and the broader Middle East had worsened the under-recovery in the market that had already been obtaining.
“If you look at before the war, crude oil prices were sitting at $60 or $70 per barrel, and now they've been fluctuating above the $100, so obviously now the cost of product has gone up, logistics have gone up, insurance and everything else has gone up, and Botswana is a net importer or price taker. “We have no influence over the things that are happening in the international market, and already, the under-recovery for petrol is between P2 and P4 per litre, whilst for diesel, we're looking at about P5 per litre, under-recovery. “We're only halfway through the month, and so one can only wonder how the situation will be by the end of the month,” an industry executive following the latest developments said.
Whilst Botswana has made good ground in the national priority of diversifying the sources of its fuel imports, the regionalised and deepening nature of the crisis leaves the country open to wild price swings. Traditionally, Botswana’s imports are dominated by South Africa, but at present, industry insiders estimate that Mozambique and Namibia contribute up to 60% combined.
However, nearly all of the supplies are through networks linked to major oil traders whose sources are in the Middle East, where the ongoing war is worsening supply constraints, blockages and price dynamics associated with supply and demand.
“South Africa only has Natref as its refinery, and it prioritises the home market before considering Botswana and others, meaning that our supplies here are mainly from the Middle East,” another insider said. “Botswana Oil, which has a 90% import mandate, is using major traders who source most likely from Oman, the United Arab Emirates and South Africa was even getting from Iran. “When supply is constrained, these traders often look at where they can get better returns or margins, which also happened when Russia invaded Ukraine, and more supplies went to Europe than Africa. “Whether you are Botswana Oil or a citizen importer, you have no control, and the traders move to spot prices, rather than contract prices.”
South Africa, which provides a public measurement of retail pump prices and makes adjustments on a monthly basis, is expected to effect increases of between R4 and R8 for petrol and diesel, respectively, next month.
BERA, meanwhile, has the option of using the National Petroleum Fund to absorb the under-recovery and not increase retail pump prices immediately. However, the fund has generally had low balances in recent years, weakening its use as a buffer.
Earlier this month, the regulator warned that the Middle East situation was dynamic in terms of supply, but pledged to closely monitor the situation.
“The continuation or escalation of geopolitical conflict in the Middle East and disruptions to key maritime routes may present potential risks to future global fuel supply chains. “In such circumstances, fuel-producing countries may prioritise domestic demand, potentially resulting in export restrictions or supply disruptions, including non-delivery of contracted cargoes due to force majeure,” the regulator said.