BERA, which calculates fuel prices and recommends adjustments to the Ministry of Minerals and Energy, began a series of retail pump price cuts last year, stretching into this year, which helped ease inflation off the 14-year highs seen last August.
This year, BERA decreased pump prices twice by an average of P1.13 in January and 87 thebe in June, but also increased the prices twice by an average of 81 thebe in March and P1.77 on Wednesday.
In a statement, BERA officials said the latest price increase reflects challenges in the global supply chains around fuel, particularly restrictions and inconsistencies in production by some oil-producing countries.
“The increase was mainly driven by supply-side factors such as the voluntary output cuts by Saudi Arabia that are to be extended to the end of 2023,” officials said.
Saudi Arabia and Russia, two of the world’s largest producers of crude oil, have been cutting back on the amount of oil they pump to the world, in a bid to prop up prices and stabilise market conditions for the demand of oil in global markets.
Motorists in Gaborone will now pay P15.52 per litre for unleaded 93, P15.86 for unleaded 95 and P16.49 for diesel, a harsh wake-up for those who had hoped the pressure on fuel prices had eased for good.
While unwelcome, trend analysis shows that even with the latest increase, motorists will be paying less than what they were last year, thanks to the string of reductions effected since last year.
Last September, motorists in Gaborone were paying P16.17 for a litre of unleaded 93, P16.47 for unleaded 95 and P17.69 for diesel. Even paraffin is cheaper, as it will now cost P13.78 per litre after this week’s increase, compared to P15.03 per litre in September last year.
However, the sharp increase this week is expected to trigger higher inflation, putting the costs of goods and services further beyond the reach of ordinary Batswana who have battled to survive since the pandemic.
Transport inflation is the most significant factor influencing inflation in the country, as Statistics Botswana assigns it a 24.43 weighting in the basket of 12 goods and services which are measured every month to produce the inflation calculation.
In July, the index tracking the cost of operating a vehicle, was 15.8% lower than it was in July 2022, reflecting the softer fuel prices.
Officials at the Finance Ministry have said global macroeconomic instabilities are set to continue buffeting motorists, with the ongoing war in Ukraine expected to worsen retail pump prices. “While global growth prospects remain subdued, downside risks could escalate with a worsening of the geo-political tensions in Ukraine,” the officials said in the draft Budget Strategy Paper released this week. Ends...
