National Energy Fund stable despite N$1.3 billion spending to cushion fuel prices

Industries, mines and energy minister Modestus Amutse stated that the National Energy Fund remains stable, despite spending N$1.3 billion over two months to mitigate rising fuel prices. He clarified that there is no crisis and the fund is not facing insolvency. The government utilized the fund to protect consumers from increasing international fuel costs, disbursing N$805 million to suppliers in April and N$490 million in May, leaving the fund with N$200 million to N$300 million. Amutse expressed confidence that new measures, including a transition to a bulk fuel supply system, will help rebuild reserves. The ministry introduced a temporary three-month fuel supply arrangement through Vitol while preparing a coordinated bulk fuel import system. This new model, where wholesalers jointly procure fuel, aims to reduce import costs and eliminate monthly import premiums, potentially saving the government N$300 million monthly. Economist Tannan Groenewald, however, cautioned that the fund might not be able to absorb another major international oil price shock independently, as it was designed for normal fluctuations, not sustained increases due to geopolitical tensions. Groenewald warned that repeated shocks could strain the budget, potentially diverting funds from health, education, and infrastructure, or necessitating more borrowing. Nevertheless, he noted that anticipated lower international oil prices should aid the fund's recovery, suggesting that over-recoveries should be retai