Namibia is not yet an oil producing country and has no capacity to refine crude oil to produce petrol and diesel fuels. All such fuels are therefore imported, primarily by ship mainly from South African refineries in Durban and Cape Town through the port of Walvis Bay. Walvis Bay hosts the National Oil Storage Facility operated by the commercial public enterprise Namcor. Fuels are then transported by rail to nine inland depots in Windhoek, Okahandja, Tsumeb, Keetmanshoop, Mariental, Grootfontein, Otjiwarongo, Otavi, and Ondangwa. Products are then moved from these secondary depots by road to fuel service stations. Presently five companies are involved in the marketing of fuel products:  Engen Namibia, Puma Energy Namibia, Total Energies Namibia, Vivo Energy Namibia, and the commercial public enterprise Namcor.

The import, distribution and sale of certain “controlled fuels” are regulated by the Petroleum Products and Energy Act of 1990. ULP95, ADO50 and ULSD10 Diesel are classified as controlled fuels while other fuels such as LPG, paraffin, kerosene and jet fuel are not. The prices of controlled fuels are regulated by the Ministry of Mines and Energy and are set on a monthly basis. Information on monthly price changes can be found on the Namcor website.

The prices Namibian consumers pay for these controlled fuels are based on the Basic Fuel Price of fuel which is landed and stored at Walvis Bay. This price is mainly determined by the international oil, refining and shipping markets outside Namibia’s control. On top of this price come the following additions:

• A common excise duty agreed by all members of the Southern African Customs Union (SACU);
• A fuel levy introduced in 1990 to provide revenue to the National Energy Fund (NEF);
• A road user charge introduced in 2000 to provide the main source of income for the Road Fund Administration and the Roads Authority;
• A fuel tax which has existed since 1990 and generates revenue for the fiscus;
• A levy which provides the main source of income for the Motor Vehicle Accident Fund (MVAF) of Namibia; and
• A levy which provides the main source of income for the National Road Safety Council.

With the exception of the customs duty and fuel tax, these additional components are determined solely by the Minister of Mines and Energy on the basis of need. The customs duty is paid into the SACU revenue pool while the fuel tax is paid into the State Revenue Fund. The road user charge goes directly to the Road Fund Administration (RFA) and on to the Roads Authority (RA) and while the MVA levy is collected by MME into the NEF and paid out monthly to the MVAF. It is important to note that all of these additions are set in absolute Namibia dollars and cents per litre of fuel rather than as ad valorem taxes. They therefore do not change as the price of fuel changes. Furthermore, fuel retailers cannot compete with each other on the price of these controlled fuels. Prices are set so as to keep a notional slate balance in balance which means that in any particular month a certain amount of over or under-recovery may take place but these should be in balance over the cycle.