Following Gaborone Central Member of Parliament (MP), Dr. Phenyo Butale’s recently rejected motion requesting government ‘cushion’ consumers against the constant hiking of fuel prices, Energy Minister, Eric Molale has spoken publicly on the matter.

Molale convened a press briefing on Tuesday this week, where he outlined the pricing process of retail fuel prices amid concerns the hikes were due to the depleted National Petroleum Fund (NPF).

Last week Molale led an onslaught against Butale’s proposal, claiming it was already what government was doing.

Since January this year, brent crude oil prices have increased from $62.87 per barrel to $80.63 per barrel.

Despite this increase in the international crude oil and finished product prices, Molale noted that the frequency in which domestic prices have been raised was much lower than other countries.

“Most countries that regulate fuel prices adjust them more regularly on a monthly basis like South Africa to avoid price adjustments backlogs,” explained Molale, adding that government is vigilant of the impact of the changes on inflation in adopting regular price adjustments.

Since May 2016, fuel prices have increased six times – the latest hike coming into effect last Thursday.

The NPF, which also acts a cushion to consumers during times of under-recoveries, currently has a balance of about P76 million (as at 31 October).

However, Molale stressed that this money was already committed to clear government debt to oil companies for December 2017, estimated at P96 million.

Be grateful it's not worse!


Molale believes even if the P230 million currently subject to court process was not taken out, monies would still had to be sourced elsewhere to assist the Fund.

“This is because at the time of the alleged misappropriation, prices had already gone into an under-recovery position,” clarified Molale.

Currently government owes oil companies over P1.3 billion, a substantial increase from the P98 million it owed at the start of the year.

With the rate of growth of government debt to oil companies at P126 million per month against the NPF levy collection of P13.6 million per month, Molale says the Fund cannot cope to raise the revenue required to clear the debt.

Molale feels the current situation, where government owes the industry huge sums of money, could potentially lead to retrenchment of employees in addition to exposing the country to the risk of fuel supply interruptions.

Despite the recent increases, prices that local consumers have been paying for all petrol grades has reportedly been lower than the actual cost by more than P1.70 per litre while for diesel grades has been more than P2.25 per litre.

A further increase in fuel prices is expected next month.

Experts are worried that these hikes are likely to negatively impact on all consumers, even those who do not own vehicles as cost of transportation is likely to impact food prices and other commodities leading them to go up as well.

It is also feared that such frequent increases could lead to the erosion of disposable income for a lot of consumers.

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