Alweendo plays down Schlettwein’s fuel price onslaught

Energy minister Tom Alweendo has played down suggestions by his agriculture counterpart Calle Schlettwein’s that the energy ministry was using the latest fuel price increase to subsidise employers in the fuel sector for them to afford minimum wages, effectively making ordinary Namibians bear the cost.Schlettwein’s remarks, made on social media, followed the recent announcement of a 50% per-litre hike in petrol and diesel prices, effective today. "Petrol and diesel prices are to be increased to fund road maintenance and minimum wages, we are told. The latter is a problem," Schlettwein posted, attracting a wave of reactions. He further questioned: "Is it now a policy of the Ministry of Mines and Energy to subsidise employers in the fuel sector to pay minimum wages? Is it a policy that taxi drivers, workers, farmers, and civil servants must contribute from their incomes (by paying more for fuel) to subsidise employers in the fuel sector to pay minimum wages?"Schlettwein, who is set to leave Cabinet this month, argued that Cabinet is merely informed about such decisions and has no power to change them. “It [Cabinet] does not have discretionary power here," he stated. When challenged by a follower who argued that ministers should address public concerns in Cabinet rather than on social media, Schlettwein responded: “Whom and for what you voted for is your business. I am free to comment on social media on topics that should concern everybody and when I feel so I shall continue to do so.”Responding to these remarks, Alweendo told Namibian Sun that fuel prices are regulated by the government and not determined by fuel retailers. "The price consists of several components: the cost of fuel, transportation, insurance, and various levies, including those for the Motor Vehicle Accident Fund (MVA), the National Energy Fund (NEF), and the Road Fund Administration (RFA). Additionally, profit margins are set for importers and retailers,” he explained.Alweendo further clarified that while businesses typically pass on increased costs to consumers, this is not permitted for fuel retailers. He pointed out that labour costs are a part of operating expenses for fuel retailers and noted the recent 150% increase in the minimum wage for the sector - from N$7.20 per hour to N$18.00. He added, "The current dealer profit margin is N$1.92 per litre, and with the proposed 30-cent increase, it will rise to N$2.22, an increase of 15%."The ministry’s latest fuel price review indicated that the Namibia dollar appreciated by 1.25% against the US dollar in February, making oil imports relatively cheaper. The review stated: "In February 2025, the average price of Petrol 95 was USD 87.32 per barrel, reflecting a 0.09% decrease from the previous month. The average price of Diesel 50ppm was USD 91.42 per barrel, a 3.02% decrease, and Diesel 10ppm stood at USD 91.50 per barrel, down by 3.08%."Despite lower global oil prices, the review revealed an under-recovery of 17.54 cents per litre for petrol, but over-recoveries of 4.13 cents per litre for 50ppm diesel and 13.18 cents per litre for 10ppm diesel.The ministry attributed the price hike to two key domestic factors: the new minimum wage for fuel retail workers, effective 1 January 2025, and ongoing funding shortfalls for road maintenance. "The national minimum wage for fuel retail workers more than doubled from N$7.20 per hour to N$18. This sharp increase could not be fully absorbed by the industry without impacting jobs and business sustainability, given the tight dealer margins," the ministry said.Additionally, the 50 cents per litre levy for road maintenance remains partially unfunded due to fuel price fluctuations during the year. To address these issues, the ministry resolved to increase the dealer margin for fuel retailers by 30 cents per litre. This move aims to meet minimum wage requirements, preserve jobs, and ensure the sustainability of service stations. "The adjustment raises the dealer margin to 222 cents per litre," the ministry stated.

Alweendo plays down Schlettwein’s fuel price onslaught

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Namibian Sun 2025-04-23

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Alweendo plays down Schlettwein’s fuel price onslaught

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Namibian Sun 2025-04-23

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