Friday, March 29, 2024

Zambia should revert back to the old system of reviewing fuel prices after three months

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Social Economist and business consultant Kelvin Chisanga says Zambia should revert back to the old system of reviewing fuel prices after three months.

Mr. Chisanga said the monthly review of fuel prices by the Energy Regulation Board (ERB) is costly to the business community.

He observed that on business and investment fronts the new system doesn’t give stability in the prices of the commodities.

Mr. Chisanga said the regular revision of fuel prices in Zambia is further negatively affecting the Oil Marketing Companies.

“Monthly fuel cost calculator, possible inflation driver. Out of curiosity and peculiar interest too, I have said this many times before that the monthly fuel cost calculator which the Energy Regulation Board (ERB) embraced in Zambia, as a key model of controlling availability of fuel and/or oil commodities, is costly in many ways. Firstly, on business and investment fronts it doesn’t give stability in the prices of the commodity. Secondly, it doesn’t have a sense of comfort in terms of security of supply with this crucial component of the productive element which is highly required at all sectorial levels considering the structural shape of our local economy,” Mr. Chisanga said.

He said there is also a need to increase the fuel storage capacities through private public partnerships (PPP) so that the nation can have outstanding security of supply.

“As it actually runs some losses on the part of OMCs as well due to many plethoras of factors that can be put for consideration, it is indeed now very difficult to make some sound business projections and to work on predictability of future investment patterns. There is a need for stakeholders to make some conscious decisions which should be bold enough to revert to three month procurement cycle, and also to work on increasing the fuel storage capacities through private public partnerships (PPP) so that the nation can have outstanding security of supply, if possible place in key productive areas of our domestic economy across the country,” Mr. Chisanga said.

He also proposed the removal of the fuel levy slapped on all petroleum commodities at the pump station.

“Also, the government policy makers should disband “fuel levy” slapped on all petroleum commodities at the pump station, and turn this into “stabilization and recovery levy” to be used as a special cushion in cooling spikes from sudden price-growth, as it can be used for appropriate utilizations, especially as and when the markets tend to go in a negative direction with this essential economic commodity. On the inflation patterns, we expect the base effect to continue making some positive developments though with minimum impact towards the target band of 6-8% policy corridor,” he said.

“However, we have also noted that the Kwacha has continued sliding with some nominal loses due to the sustained effects being experienced in the supply factors, coupled with a pick-up seen with the demand which is emanating from the importers and corporate buyers, this is work contrary to the expectations despite the exporters and sellers making statutory monthly obligations. It is advisable to keenly observe these two factors, thus foreign exchange market fundamentals and oil price structural movements, so that we don’t spike inflationary pressure again like we saw last year,” Mr. Chisanga added.

He concluded:”Finally, it is well cognizant to state that there is still positivity and goodwill that are taking force, and this has given us a lot of hope considering the macroeconomic development seen so far from the number of reductions, we are also seeing being recorded in key economic variables such as inflation development, slow-paced movement in exchange rate and moderate activities observed with the trends of COVID-19 cases.”

13 COMMENTS

  1. Mr Chisanga is incorrect. Previously, when fuel came out of Indeni, three months was fine because of the shipments were coming in by the shipload. Now with Indeni closed, shipments come in by multiple truck loads per day, and therefore prices also vary on a daily basis, and nobody can predict what the prices do over a three month period. Therefore prices should be fixed on a weekly basis.

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  2. Crude oil shipments for Indeni came in every quarter so prices could easily be fixed every three months. Now fuel comes in by multiple truck loads every day, so prices also vary on a daily basis. Three months intervals are too long. Weekly would be workable.

  3. Now petrol has gone to K26+ per liter instead of the K10.00 we were assured of. All the free education is fake because even without school fees we are not going to be able to meet our daily needs. Upnd temunobe.

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  4. @ Sheikh: yes bro good question to the PF cadres and the article writer by the way he is also a PF cadre. That is how these guys used to run every GVNMNT sector-just like this. Imagine also that the person speaking like this is a PF Degree holder-what more of pure cadres like Lusambo-what ll they say – 6months review? Let me out it in simplicity dear PF cadres – its like you ve a company in which u hire staff every month but only pay the new staff every year. Does that make sense,u hire every month and only pay salaries once a year, how then were your employees survivinng all these other months?They were stealing from you- thats how!

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  5. Deja Vu – You rightly know that the price of crude is dependent on external factors but you are just stirring up a hornets’ nest to excite the ignorant ones ..remember during the pandemic the price was so low that producers were giving at away on credit,,,it was as cheap as chips. Today its a different issue especially whats happening in Ukraine if someone tells you vote for me and I will bring the price of petrol down to K2 per litre and you vote them based on that then you my friend are a truly gullible chap.

  6. Honestly petroleum product prices are headline news across the globe. Countries with ports, oil producers like the US are all affected by the higher prices. In some countries prices are rising every day! We should give government a break and not raise unrealistic expectations in people. Its probably going to get worse before it improves. Lets explain this reality to people less exposed to global events

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  7. You may buy everyday but not necessarily sell the same stock the same day. This is oil which can be easily hoarded or stockpiled unlike the perishables. Someone can make killer profits on future returns. Today the profit on litre brought in last month is K4, next month…

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