Fuel prices likely to go up

Staff Writer | Thursday November 1, 2007 00:00

 

The Acting Director in the Department of Energy Affairs, Kesetsenao Molosiwa, said Tuesday that he could not say when his department would make the announcement.

If it is made, the announcement would be a departure from the news blackout on fuel price increases a few months ago.

Molosiwa said in an interview that he was concerned about high crude oil prices on international markets. He said in the past, his department did not always adjust pump prices in accordance with international markets because the Petroleum Fund was sufficiently strong to cushion off the impact, but the Fund has been depleted.

Last month's record high of $81.51 (about P507.81) per barrel resulted in anxiety in the oil business sector in anticipation of an upward adjustment of fuel prices by Government.

'Unless they have a contingency plan, I think authorities are going to increase fuel prices,' said Gibson Matenge, the Chairman of the Gaborone Taxi Association whose members transport thousands of commuters in the capital daily.

'It will have a negative impact on us because people will no longer commute as they do now.'

It normally takes a month for the impact to filter through in Botswana and for authorities to adjust the prices accordingly.

But pump prices have been rising since the Petroleum Fund got exhausted, especially after the controversial currency devaluation in 2005. The Botswana Confederation of Commerce, Industry and Manpower (BOCCIM) has also raised concerns over the prospect of fuel price increases.

BOCCIM spokesman Tebogo Rapitsenyane said the effects of continuing crude oil price increases on world markets would certainly have an impact on the Botswana economy.

'Very soon, Government will have no option but to raise the prices so as to meet domestic demand,' Rapitsenyane said.

'Which will be a sad thing as we have been getting good rains recently, and the expectation is that many people with arable land are going to plough. The price of fuel is going to determine how much a hectare would cost, for example, including the cost of the final product.'

BOCCIM was concerned that fuel increases affect prices of goods and services, more especially in a country that is a net importer like Botswana. 'A price increase on goods, especially when it happens frequently, discourages consumption as people tend to focus more on inelastic or necessary consumption and cut on semi-luxury and luxury goods.

The result of this is obviously inflation that the Bank of Botswana is trying to control,' Rapitsenyane said.