Energy minister Alweendo criticises Opec countries’ oil production policies for affecting prices and inflation

Minister of mines and energy Tom Alweendo has criticised the Organisation of the Petroleum Exporting Countries (Opec) and other oil-producing countries for controlling oil production in a way that affects prices.

He was speaking at the 2024 Interstate Oil Committee meeting at Swakopmund yesterday, slamming the countries’ continued policy of maintaining oil supply at market-stabilising levels.

Alweendo said these policies undermine efforts by oil-demanding nations to control inflation and stabilise economies.

“Our deliberate policies are always aimed at ensuring price stability and the security of fuel supply in our respective oil markets, but it is usually the continued policy choices of Opec and other oil producers to maintain oil supply at market-stabilising levels which undermines, perhaps unbeknownst to them, our well-intended efforts as oil-demanding nations,” he said.

Alweendo said a more humane approach to business dealings is needed, adding that the pursuit of profit should not come at the expense of the well-being of the majority.

“It must simply not always be a matter of chasing bigger profits by cutting down on crude oil production. While such action steps are a blessing to a few, the majority is left reeling from the pain of high oil prices and the associated inflation relating to the prices of basic goods and services,” he said.

On average, a barrel of refined petrol and diesel in December last year was trading at about US$100, and a litre of petrol and diesel at Walvis Bay was about N$22.

The average price per barrel of either petrol or diesel today is significantly below the U$100 mark at about US$88, but a litre of either petrol or diesel at Walvis Bay today is still in the region of N$20.

“The bitter truth is also that whenever there is a fall in global oil prices per barrel, such reductions do not always translate into lower fuel pump prices in our respective countries.

“This is owing to other offsetting factors, such as currency depreciation, additional premiums on top of the basic fuel price, or increases in freight rates or the costs of shipping petroleum products to our shores,” Alweendo said.

The Interstate Oil Committee, under the Southern African Customs Union (Sacu), meets bi-annually.

The meeting, which started yesterday and will continue until tomorrow, is hosted by Namibia.

It aims to ensure regular coordination on matters related to the acquisition, storage, supply and distribution of petroleum products within Sacu.

Alweendo said the meeting comes at a time of great uncertainty in the global oil industry, caused by factors such as the Russia-Ukraine war.

He said the Namibian government has intervened by halving the levies imposed on the prices of petroleum products to offer consumers relief.

This was among other equally important interventions the government made through the National Energy Fund’s fuel-equalisation mechanisms.

“We ended up pumping in over N$1 billion to cushion our fuel consumers against oil price volatilities back then,” Alweendo said.

Alweendo’s sentiments come months after the petroleum commissioner Maggy Shino told S&P Global that the country had plans to join OPEC if exploitation of its giant offshore oil and gas discoveries goes as planned.