Fuel retailers scramble to avoid losses
07 May 2020 | Energy
A brief stock outage of petrol and diesel on Wednesday at some fuel stations in Namibia was due to savings measures by retailers forced to turn over every cent amidst the global slump in demand for fuel.
Following several queries from the public who arrived at fuel stations that had run out of petrol and diesel for a few hours on Wednesday, ministry of mines and energy spokesperson Andreas Simon said that some fuel retailers had placed their orders at the last minute for new stock this week as they intended to finish the old stock before the date of the price decreases on Wednesday.
In some cases, this led to a few hours in which fuel stations were unable to service customers with petrol or diesel.
“They argue that if they had continued with the old stock after the effective date of the new price, then they would be selling their fuel at a cheaper price. So it was basically a saving measure on their part,” Simon explained after reaching out to fuel retailers to enquire about reported shortages.
He added that the brief gap in fuel availability at some fuel stations was quickly rectified, and the new stock is being sold at the lower prices according to the adjustment for the month of May this year.
Hamutele Lazarus Nafidi, spokesperson for Vivo Energy Namibia, confirmed that a temporary out of stock situation reported at a Shell service station in Windhoek was not due to supply issues, but merely due to running out of stock before the next delivery on Wednesday.
Engen Namibia also yesterday underlined that some fuel stations briefly ran out of stock due to the timing of the decrease in pump prices, and some owners only ordered new stock on the day of the decrease to avoid having to sell fuel at a loss.
The drop in fuel prices was announced by the mines and energy minister Tom Alweendo on Friday last week, who said the price for both 95 octane unleaded petrol and diesel will drop by N$1 per litre, as of Wednesday this week.
“Like all other sectors of the economy, our local oil industry, both bulk, importers and fuel retailers are negatively affected by the national lockdown to curb the spread of Covid-19. Local demand for fuel has dropped significantly,” said Alweendo.
He said bulk fuel importers in Namibia are only selling a “fraction of what they usually sell and some retailers sales are close to nothing depending on their location.”
Alweendo said the decrease in fuel prices was necessitated by the fallout of the global Covid-19 pandemic which has brought the global transport industry to a near standstill, causing the demand for oil around the world to be significantly depressed against a huge supply of oil storage.
He said the imbalance between demand and supply led to the collapse of global oil prices and was also accompanied by a sharp depreciation in the exchange rate between the Namibia dollar against the US dollar, which could potentially offset the benefits of a decline in oil prices.