Monday, November 29, 2021

National Petroleum Fund is running dry

The National Petroleum Fund from which the government pays petroleum retailers the difference between the administered and prevailing fuel prices had come under pressure from rising crude oil prices, newly established Botswana Energy Regulatory Authority (BERA) has said. 

BERA Founding Chief Executive, Rose Seretse admitted this week that the Fund is currently under pressure from the increase in global prices as well as the number of funding obligations. The fund, which is supported by a levy on the pump price of fuel, is used to finance the ongoing construction of some government strategic fuel storage facilities, procurement of strategic stocks for the economy, and financing of insurance premiums in addition to price stabilization. 

Seretse maintains that the recent increase in fuel prices, although it was a result of the rise in international crude oil prices and refined product prices, “It does not entirely address the prevailing under-recovery situation”. 

On Wednesday, the petroleum sector regulator approved a marginal hike in prices of retail petrol grades (unleaded petrol 93 and 95), all diesel grades (diesel 500ppm and 50ppm) and illuminating paraffin got increased by 20 thebe litre.

Globally, the average crude oil prices have been increasing since June 2017, largely influenced by the Organisation of Petroleum Exporting Countries (OPEC) to restrict the supply of oil into international markets thereby triggering demand to be higher than supplies. 

In Botswana, the last price increase was in March 2017 during which both petrol and paraffin were increased by 20 thebe per litre, and diesel was increased by 25thebe per litre.

“The trend of international oil prices is influenced largely by the market forces of supply and demand. Furthermore, it is not easy to predict what the price of oil will be in future owing to the volatility of such prices,” she said.

Established recently, Seretse’s BERA is responsible for providing an efficient regulatory framework for the energy sector, with the primary mandate of providing the economic regulation of the sector.

By the end of this week, the Authority said that it will continue to closely monitor the development of petroleum products prices in both regional and international markets. Seretse said that such a market analysis will ensure that proper and timely decisions are made with the objective of ensuring optimal price control to both the general public and the fuel supply industry. 

 

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