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Increase in the retail pump prices for Petrol, Diesel and Il...
08/11/12

The Ministry of Minerals, Energy and Water Resources  informs the general public and other consumers that the retail pump prices for petrol, diesel and illuminating paraffin will be increased with effect from 0001hrs, Friday, 9th November 2012.

The price adjustment is as follows:

• Both unleaded and lead replacement petrol grades will increase by 50 thebe per litre.

• Diesel will increase by 50 thebe per litre.

• Illuminating paraffin will increase by 50 thebe per litre.


This price adjustment follows on the review of fuel prices for the month of September 2012 when Crude oil (Brent) prices averaged around US$112.89 per barrel which led to significant under-recoveries.

The following three key factors form the main basis for the analysis: -
  
i) Movement in international Crude Oil Prices.
The volatility of crude oil prices remains to be influenced by the five key price determinants, namely: -

a. Changes in the Supply and Demand

b. Production and refining capacities

c. OPEC challenges involving strategies to maintain certain levels of  production quotas

d. Geopolitics- especially the Middle East


ii) Development of the Petroleum Product Prices

This relates to Free On Board (FOB) prices. These are international market prices for refined products and they are based on the Mediterranean, Arab Gulf and Singapore rates for the SACU market. This is based on daily tracking of FOB prices over a period of a month and a review is conducted at the end of every month.

iii) Exchange rates movements

Refined products are purchased in US Dollar and sold in Botswana Pula in the local market. The fluctuation between the US Dollar and the Botswana Pula is normally factored in during the analysis for purposes of establishing the impact of the exchange rate on fuel transactions. 

While retail prices of petrol, diesel and paraffin were each increased by 50 thebe per litre on the 17th September 2012, this was not enough to offset the three products’ under recoveries. Retail prices continued to be lower than the actual cost of bringing petroleum products to Botswana. This has resulted in the National Petroleum Fund (NPF) having to pay substantial amounts to compensate oil companies for price differentials. The continuing under recoveries has put the National Petroleum Fund (NPF) under pressure because of the accumulated debt to oil companies.

The Government will continue to monitor the development of petroleum products prices in both regional and international markets. This will enable Government to take more appropriate and informed decisions to ensure optimal price control to both the general public and the fuel supply industry.

 


 

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