Fuel station owners adamant about increase
Fuel station owners in Namibia are under pressure due to a regulated market in which input costs are not taken into account and wholesalers, banks and increasing competition are eroding everyone’s profit margins.The chairman of the Fuel and Franchise Association (FAFA), Hennie Krüger, and representatives of the industry had a meeting with the Deputy Minister of Mines and Energy, Kornelia Shilunga, on Monday night.
Krüger, who was a guest on Republikein's talk show Kletskompas yesterday, said that among other things, the main issue is the profit margin set by government. He said that fuel station owners are dissatisfied with the N$1.13 per litre the regulators prescribe.
According to him, this margin was last adjusted five years ago, and four years ago the practice of adjusting profit after proper analysis of input costs was suspended without explanation.
“They are now sucking it out of their thumbs,” he said of recent assessments of possible adjustments that have since been based solely on inflation.
Flooded market
Another important issue is the influx of wholesalers into the retail market.
Representatives of Engen, Total and Shell (Vivo Energy) who were present at the meeting should, according to Krüger, cede further profits of between 17 and 35 cents per litre to their suppliers.
Even more worrying are indications that emerged at the meeting that the ministry is negotiating with wholesalers, who are likely to become even more involved in retail, he said. “Wholesale retailers need to stay in wholesale,” he opined. “They do not belong in a regulated retail industry.”
Another headache is commercial banks that charge 1.85% of credit card transactions and 1.5% of debit card transactions for fuel, he said. This means that another 35 to 42 cents of the N$1.13 profit fuel station owners make, must be paid for these transactions.
This issue has been brought to government’s attention since 2007 but without a solution, he said. “Get all these people out of retailers’ pockets and the volumes will increase, which will stabilize the price,” he argued. “Then there will be money to spend again.”
Too many licences
After the ministry lifted a moratorium on new licenses for fuel trading in March last year, 21 or 22 new licenses were granted, he said.
The majority were issued to the state-owned enterprise, Namcor.
Namcor is expanding its retail operations, adding more filling stations to the 12 that already exist, to have 33 filling stations nationwide by 2024.
So many licences for new filling stations do not make sense in a market with declining volumes, according to Krüger. “They are creating a [volume] shortage,” he said, adding that filling station owners are currently struggling. “The fault lies with the regulator.”
Krüger said he is happy to give Shilunga’s office time to give feedback.
FAFA is opposed to the greater participation of wholesalers, he said, but there is hope that government will intervene and the earlier threat of a nationwide strike will no longer be necessary.
Between 8 000 and 10 000 people currently work in the fuel industry.
Shilunga promised to respond to questions sent to her by today. - [email protected]