Namibia’s efforts to cushion consumers against rising fuel costs have depleted the National Energy Fund’s (NEF) reserves to N$416 million, just over half the N$800 million buffer required to sustain fuel price subsidies for at least three months.
Minister of Industries, Mines and Energy Modestus Amutse said the fund has been under severe financial pressure since April and May 2026, with rising international oil prices, shipping costs and a weaker Namibia Dollar forcing the government to absorb substantial fuel costs to protect consumers.
The financial strain has prompted the government to increase petrol prices by N$2 per litre and diesel prices by N$3 per litre, effective 4 November 2026, as it moves to prevent the fund from running out of money.
“At the same time, the NEF’s equalisation reserve stands at about N$416 million, which is well below the N$800 million buffer the Ministry set aside to cover at least three months of under-recoveries,” Amutse said.
“The Fund has been carrying a heavy burden since April and May this year, and without a price adjustment it would be at risk of being fully depleted within a short period.”
According to the Minister, the NEF is expected to pay approximately N$384 million to oil marketing companies to cover fuel under-recoveries recorded in October alone, reversing an over-recovery of about N$87.6 million recorded in September.
The under-recoveries reflect the difference between the actual cost of importing and supplying fuel and the prices consumers pay at filling stations.
Amutse said the government’s intervention had prevented the full cost of fuel imports from being passed on to consumers, but the continued financial burden had become unsustainable without adjustments to pump prices.
Even after the latest increases, the government will continue subsidising petrol by approximately 81 cents per litre and diesel by between 52 and 53 cents per litre.
“I wish to emphasise that even after this increase, the adjustment does not cover the full cost,” he said.
“Government has deliberately chosen to carry part of this burden rather than pass the full cost to consumers.”
The adjustments will increase the price of Petrol 95 at Walvis Bay to N$28.58 per litre, while Diesel 50ppm will rise to N$30.86 per litre and Diesel 10ppm to N$30.96 per litre.
The Minister attributed the mounting pressure on the fund to disruptions in international oil markets, particularly the conflict in the Middle East, which has affected shipping through the Strait of Hormuz.
He said Brent crude prices increased from approximately US$101 per barrel in early October to around US$115 per barrel towards the end of the month.
Shipping costs have also increased sharply, with the freight index used in Namibia’s fuel pricing model rising by approximately 40% during October, while vessel waiting costs increased by about 64%.
As a result, shipping and demurrage costs for petrol increased from approximately 281 cents to 402 cents per litre, while those for diesel rose from 211 cents to 302 cents per litre.
The depreciation of the Namibia Dollar against the US Dollar further increased import costs, with the exchange rate averaging N$16.550 per US dollar between 1 and 26 October, compared with N$16.215 in September.
These factors pushed the landed cost of petrol at Walvis Bay up by 5.74%, while the cost of both diesel grades increased by 2.44%, despite a decline in international refined petroleum product prices.
Amutse said Namibia had secured some relief through a supply discount negotiated with TotalEnergies Marketing Namibia under the interim Bulk Petroleum Import Coordination mechanism.
The arrangement reduces the landed cost of petrol by 71 cents per litre and diesel by 61 cents per litre.
With Namibia consuming approximately 100 million litres of fuel monthly, the discount is estimated to reduce the country’s fuel import bill by N$64 million per month, comprising N$21 million on petrol and N$43 million on diesel.
However, the savings have not been sufficient to offset the increased costs of importing fuel.
The government has also approved a 15% increase in road transport rates as an interim measure to address rising fuel distribution costs, particularly for smaller towns and remote areas.
The adjustment will result in additional fuel price increases of between one and 11 cents per litre in towns supplied from depots outside NEF-subsidised areas.
Amutse said the government was reviewing the fuel pricing system and pursuing measures to reduce import costs while protecting the financial position of the NEF.
Despite the pressure on the fund’s reserves, he assured consumers that Namibia had sufficient physical fuel stocks and that there was no immediate threat of shortages.
“The Ministry once again reassures the public that Namibia has sufficient fuel stocks and that the national fuel supply system remains stable,” he said.
