The Energy Regulations Board (ERB) has refuted claims that government has been subsidizing fuel.
ERB Chairperson Reynolds Bowa disclosed that following the increase of fuel prices on the international market in September last year, ERB used the strategic reserve fund to support price stabilization in the country.
Mr Bowa explained that to avoid the price shock, a decision was made that the cost of transporting petroleum products in Zambia would be cushioned by the use of the strategic reserve fund.
He was responding to reports by some sections of the media that government has been subsidizing fuel, hence the steady price flow.
He stated the purpose of the reserve fund is to support the development of the petroleum industry in the country.
“This use the of the strategic reserve fund is an authorized use of the fund and is one of the purposes for which the fund was created and does not in any way constitute a subsidy,” Mr Bowa states.
The ERB Chairperson further clarified that the fund resides in the restricted coffers in the Ministry of Finance and National Planning, and are accessed by the Board after justifying the use.
Prior to occasional shortages of fuel in the country in 2005, Cabinet at the time decided to create a strategic reserve fund. For every purchase of a litre of fuel by consumers, a deduction of K1.50 is channeled to the strategic reserve fund for use when need arises.