The government has averted a major fuel crisis by increasing dealer margins by 50 cents.
This was after the Fuel and Franchise Association of Namibia (FAFA)’s had complained to the Ministry of Mines and Energy that its members were operating at a low 5% gross profit, proceeds of which they mainly use to service salaries, bank charges, rental and other operational costs.
The association was planning a major national service station shutdown if its demands were not met.
However, the Ministry responded favorably by adjusting the dealer margin by 50 cents, translating from 113 cents to 163 cents per litre.
These changes will become effective as from the 3rd of August, as announced by the Ministry’s spokesperson Andreas Simon on Friday.
FAFA’s Chairperson Hendrik Kruger welcomed the increment saying “It’s a good step in the right direction, although he said, it is not exactly what they [50 cent] needed.”
“In two weeks, we shall be dealing with the issue of vertical integration by fuel wholesalers including banks who are involved in the trade through mediation of services, because these are the cost drivers. Banks charge you for swiping and other charges, thereby tapping into our profit margin. We are, however, appreciative of the minister’s goodwill and have acted positively to our request of increasing the dealer margin,” said Kruger.
In addition, he said, FAFA will now look at the methodology of how to scientifically conduct a margin survey.
“This will then determine how to implement, at how much and when to increase the margin,” he said.
FAFA has also requested the Energy Minister’s intervention regarding vertical integration concerns, where wholesalers were now engaged in the trading of fuel, which the association said was encroaching on their market.
In turn the Ministry said, vertical integration was prohibited, while on the issues of the banks, it said, consultation will be made to find a common ground.
The association had further called for a moratorium on the issuance of fuel retailing licences
