Fuel prices shoot up by 50t

MONKAGEDI GAOTLHOBOGWE
Staff Writer | Monday May 14, 2012 00:00

The hike follows another increase in November last year that saw petrol prices jumping by 50t: diesel by 51t and paraffin by 40t. However, the Permanent Secretary in the Ministry of Minerals, Energy and Water Resources, Boikobo Paya, defended the increase in a statement on Saturday, saying the current margin of increase is far less than what the prices could have been adjusted or increased to, adding that the local pump prices for petrol, diesel and paraffin will continue to be below real pump prices by an estimated 44.41 thebe, 41.72 thebe and P1.83 per litre respectively after the latest increase. 

Paya also says a comparison of the Botswana product pump prices to the regional prices at Southern African Customs Union (SACU) level shows that Botswana prices continue to be the lowest in the region even after this adjustment. The Permanent Secretary says local petroleum product retail pump prices continued to under recover since last month, putting the National Petroleum Fund (NPF) under severe pressure as it has been necessary for the government to compensate the oil industry for some of the losses made during the period.

Paya singled out paraffin saying its retail pump price continues to experience the worst under recovery, mainly due to the fact that the local paraffin price has on many occasions been cross subsidised by the petrol and diesel prices taking into account its consumption by the poor.

He said as a result of the accumulated price under recoveries experienced by the oil industry the price under recoveries for petrol, diesel and paraffin rose to 94.41 thebe, 91.72 thebe and P2.33 per litre respectively.

The ministry also says continued increase in the international prices for crude oil and the associated petroleum product over the last four months reached a high of US 125/barrel in March 2012. 'On the basis of the foregoing; the prevailing price under recoveries will continue to put the National Petroleum Fund (NPF) under pressure.  The government will continue to monitor the development of petroleum products prices in both regional and international markets. This will enable government to take more informed decisions to ensure optimal price control considering all factors to minimise adverse effects on the economy,' the Permanent Secretary concluded.