Africa-Press – Botswana. While the decline in oil prices in the first six months of 2023 has been welcomed by consumers and businesses, easing inflationary pressures, it has had a negative impact on oil marketing companies like Engen Botswana which is expecting a massive drop in profit.
The Botswana Stock Exchange listed company has warned that the profit before tax for the half year ended June 2023 will be between 80 to 90 percent or P291.9 million to P328.4 million lower than the P364.9 million reported for the half year June 2022. This means Engen Botswana is projecting the pre-tax profit to fall between P36.5 million and P73 million.
“This is mainly attributable to the decrease in global crude oil prices during the period which resulted in a decline in inventory effects. In addition, there was reduced business activity as a result of lower disposable incomes mainly as a result of high food and consumable prices in Botswana,” the company said in a cautionary statement.
The average Brent crude oil price in the first six months of 2023 was $97.63, compared to $105.87 in the first six months of 2022, representing a decrease of 7.8 percent.
As a result of falling oil prices in the first six months of 2023, the Botswana Energy Regulatory Authority (BERA) has adjusted fuel prices thrice – with two downward moves made in mid-January 2023 and lately, June 2023 as well as the February upward move.
However Brent crude oil prices have increased since June, from $74.35 to $96.55 in September, reflecting an increase of an increase of 29 percent in the three months period. As a result, BERA adjusted fuel prices up on the 13 September, a move that will likely increase the inflation rate, annoying consumers but pleasing to companies like Engen.
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