ECONOMIST Lubinda Haabazoka says the tension in Ukraine cannot be the reason for the increase in fuel pump prices because the country has not yet seen unfavourable movements in fuel prices.
On Monday, the Energy Regulation Board (ERB) increased the pump prices of petroleum products by K2.12 per litre for petrol and K2.61 per litre for diesel, while the price for kerosene has remained unchanged.
“The upward adjustment in prices is inevitable to ensure the sustained supply of fuel to the Zambian market in the short to medium term. Notably, there has been a steady rise in international prices of petrol and diesel recorded throughout the month of January into February 2022. This has had a major impact on local fuel prices, with the price of both imported products rising above the US $100 per barrel mark,” said ERB chairperson Reynolds Bowa. “As has been reported, the supply disruptions being experienced on account of the ongoing geopolitical tension between Russia and Ukraine have had an immediate adverse impact on oil prices. Further, compounding this was the continued depreciation of the kwacha against the United States dollar, between the last price adjustment in January 2022 to mid-February 2022.”
But Dr Haabazoka says there is a reason why oil prices were being adjusted every three months and not the 30-day review period introduced by the Energy Regulation Board.
He argued that the Russia-Ukraine conflict could not be the reason for ERB to raise the pump prices of petroleum products.
“I think that Ukraine for now cannot be the reason for the increase in fuel because we have not yet seen any unfavourable movement in oil prices. I think that there is reason why oil prices were being adjusted every after three months. One of the functions of government in an economy is to perform the stabilisation function. Meaning government should stabilise the economy. Meaning energy is one of the most important input not just in production, but also in the input of households,” Dr Haabazoka said.
He has since predicted a continued rise in the prices of goods and services due to the 30-day review period of fuel pump prices.
Dr Haabazoka explained that the policy would cause uncertainty in business thereby causing businesses to overprice goods and services in fear of making loses.
“So for there to be certainty or predictability, fuel prices are supposed to be stable for a long period of time. [There are] mechanisms that government can use without subsidising oil and keep fuel prices stable for longer periods. What is happening now is that fuel prices are going up, down-up-down. So businessmen because they need stable prices of goods, are going to overprice the goods. They are going to overprice their goods and services so that any movement in the prices of fuel is cushioned and they don’t make loses,” he warned.
“The challenge with that is that even when fuel prices go down, they will never adjust their prices downwards. And in an event that fuel prices again go up, they will increase the prices of goods and services because that is the nature of business. The nature of business is to make profit. Because of uncertainty, because they do not know what the prices of fuel would be tomorrow, there is going to be a risk. Uncertainty creates those risks. So in order to manage that risk, give both monetary and non-monetary risk management methods to manage the risks. That comes with a cost that is going to be passed on to the consumer.”
Dr Haabazoka said it was clear that the new daw administration wants to do everything different from what PF did but that they should realise that “this is not about PF”.
“We know that you want to do things differently from the way the previous regime did things. There are mechanisms that I cannot mention because I am now a consultant. But there are mechanisms that we can employ to make sure that without the government having to get out money from the coffers, we are able to ensure fuel pump price stability for a long time,” said Dr Haabazoka.
Bazooka needs to know when to shut up, he’s statement lacks intellect.
Zambia is just like that. Abusing everything at the drop of a hat. Namibia does monthly bulletins but they are mostly informational. They report recoveries and under-recoveries and things researchers would love to know as they gather data and study trends. Every so often they qualify an increase. Pa Zed this will be a rollercoaster of all sorts. Munzamva kuti the rains have fallen too heavily so we are increasing price of fuel because tankers are slipping on the road surfaces.
@Kalok you have a wrong example of Nambia, fuel prices increased yesterda. Commodity prices will shortly follow. This is Namibia’s third fuel increase from January. Zambian can not be an exceptional while other countries feel the economic pinch as a result of the pandemic and war. And you want to blame it on the new government, it is cheap politicing.
ARE WE A BRAINLESS COUNTRY ?
IT SEEMS SO
Certainity and predictability will only kick in once the hugely damaged economy is stabilized, PF left a lot of debts left right and center, real prices and inflation was hidden by the PF in view of the pending elections then, the real picture has been unveiled and we have to grapple with reality. Every economist knows and understands that to stabilize an economy whose currency had depreciated by over 100% is not an easy task, it takes years. Let us all be patient and avoid alarming statements
Fuel has gone up in most of the countries already in anticipation of the supply chain issues arising from the Ukraine Russia war, Zambia will certainly not be an exception. The government also has to mobilise resources to stabilize the economy, that includes procurement of fuel and of course stem wastage, our procurement in the past was completely in a mess, just imagine a toll gate on the Kitwe Ndola road costing 73 million Kwacha, on that toll gate alone Zambia could have saved 70 million kwacha
Dr Haabazoka try to be factual and desist from using unresearched views. You strongly appear to twist biased supposedly professional economic understanding of fuel adjustments. Then, you deliberately show a lack of comprehension of a link between the Russian operations and fuel increases. You also unfairly empathise with the dead PF regime at the expense of UPND . Your criticism of the UPND does not motivate any critical analyst with sound arguments. Added to this, your critique also fails to make sense. Your seem to have solutions to the current upward adjustments of fuel prices, but you suppress them. Then, you use your career position of being a consultant as a reason as to why you do not provide solutions to the present ‘problematic fuel increases’. I do not concur with you at all…
What then could be the cause-your skin color?
Well thought out comments, business plans are founded on pricing uncertainty. So it follows that with the uncertainty brought in by volatility of a principle cost such as fuel prices will rise to reflect the uncertainty but also won’t go down when fuel prices drop. So it will act as a sort of inflationary tax on ordinary citizens and act as a sort of stimulus for businesses when it falls. I have come to appreciate Dr Habaazoka’s economic analysis. He indeed is a seasoned Economist.
This is one very du.ll economist……….
The price of a barrel of oil currently $110 and gaining due to the Russia/ukrain war…….
Fuel increment due to war in Ukraine? Amazing! The problem is that this NEW DOOM government is so used to lies that even what is plain and simple to explain to the public, they have to throw in a lie. They are failing to manage the pressure that is coming from all angles; teachers, doctors, students, name it.
Yes conflict in Ukraine will affect pump prices
But not immediately.This increment is something to do with the rising rate of the
Dollar.Bally Zambians are still waiting for
Dollar to drop to K5.
In humble opinion, I would if I was the president, peg the fuel price at K25.00 per liter and leave it there for the next four years. This yo-yo pricing is bad for business. Example I buy items at x price and sell them at y basing on current fuel price, then fuel price falls and those who buy this same item cheaper and sell cheaper. It means my items will not sell because the guy next door is selling cheaply. Let’s be serious.
Those that think they bought fuel 3 months ago at a lower price are finding everything cost associated with processing and transportation of that fuel has risen……
There is no escaping the effects of this war on oil prices…………
Even major oil producers like the USA are rasing pump prices……….
Tell them doctor, they think we were born yesterday. You lived and studied in that part of world. Educate these upnd villagers
Nalumango economic theory….. ” Increase in order to reduce”
Really laughable …price of petrol in the uk has risen at an all time high in the last two weeks and this clown trained in Russia is saying otherwise…in UK they dont riase the prices anyhow knowing how much they depend on road haulage.
ITS COMMON SENSE TO SELL STOCK COMMODITIES AT REPLACEMENT VALUE
GET THIS IN YOUR THICK HEADS
@Ndoleshyafye
So it will act as a sort of inflationary tax on ordinary citizens …
Inflation is a tax,perod.
He is right in some respect because of the enherent risks poised in current fuel procurement apart from this geopolitical issue in that significant global supply region You need to take a Stratergic approach including sustainability on sectors in the procurement of fuel taking a forward and futures looking approach posting margins and variations as and when prices rise at the same time capping to floor the price and provide some price support on critical productive sectors I indicated Early that the price range could rise to trade in between 100 and 145 beyond some cost structures So looking long-term to reserve and take advantage of Price movements will yield much economic gains than the current for an importing country like Zambia at all times
For an economist, he is poorly informed. Check Bloomberg and then let’s have a discussion. The problem with us Zambians is that we see everything as a joke online or a meme, we were busy mocking the Ukraine war when in fact it was announced over 18 days ago that the crude oil prices had breached $100/barrel. Why didn’t we stock up the cheaper fuel and then sell it to consumers at higher prices but lower than the OMCs?
We know that you are a PF cadre, everyone remembers how you used to rub shoulders with the top leaders of the fallen Patriotic Front and how few, if any your advice had been during your glorious days of PF. You compromised your Professional Standing. Now what are saying, that Ukrainian conflict has no effect on fuel,? Does Zambia have any oil fields like those in Ukraine and Russia, come on grow up. Whether you like it or not the War in Ukraine has a direct impact on International oil prices and chain distribution, come on man.
ITS NOT ABOUT PARTY AFFILIATION
ITS ABOUT A LACK OF UNDERSTANDING IN WORLD POILTICS AND FINANCE
I CAN TELL YOU NO MATTER HOW GOOD THIS PRESDENT IS, THOSE UNDERNEATH HIM ARE SERVERELY LACKING
AS IS 90 % OF THE POPULATION
WE IN TROUBLE THROUGH IGNORANCE
He is a pseudo economist who doesn’t understand the impact of war on a global commodity like oil. He says he has an economics degree but doesn’t understand economics.
No wonder lungu’s economic policy was such a mess… he listed to such a guy..
The more he talks, the more you start to wonder about these Russian degrees. He is better of going to fight for Russia in the war than poking his,nose where it is not wanted.
Reason why we should start investing in renewable energy like solar. There has to be a deliberate policy to encourage the citizenry to behin switching to electric vehicles. You’ll be amazed how much carbon emissions can be avoided when one gasoline powered vehicle is replaced by an electric one.
It’s a dumb opinion, presidents don’t peg fuel prices. Educate yourself.
Yeah, because you are a bad economist. Russia, if not mistaken is third or fourth supplier of oil on the world market. Think about that disruption.
The 10 largest oil1 producers and share of total world oil production2 in 20203
Country Million barrels per day Share of world total
United States 18.61 20%
Saudi Arabia 10.81 12%
Russia 10.50 11%
Canada 5.23
6%
China
4.86
5%
Iraq 4.16
4%
United Arab Emirates
3.78
4%
Brazil
3.77
4%
Iran 3.01
3%
Kuwait 2.75
3%
Total top 10 67.49
72%
World total 93.86
Terrible stat table, but the point is cool
#25.. Mike Tyson.. ignorant? You think the minister makes a decision on his own and implements? Come on be real. The president is informed and if convinced he gives the go ahead. You think the president can just let everyone do whatever they want without his input especially things that affect the citizens and the nation as a whole?
A clear reason why you should not study in Russia
sometimes what is needed is education on the rise or fall of prices . if you master the degree of lying to every question throne to where you could have just said a straight answer , people wont stop wondering what you are up to even if you know where you are going . but if you put a title every time u answer a query the be prepared.. today is subsidies tomorrow ukraine vs russia what will be the next title….. one inteligent villager used to lie to people that a lion is attacking him while not , they got used to the story and in the end never believed him kaaaa. peopleare still waiting………
Too many empty tins carrying PHDs in Zambia
Drs with questionable education and background
Which planet does he come from? Is he really an economist or just another loud mouth? Even if countries like USA fuel prices have gone up since the war started. Sometimes I think these loud moths just seek attention.
Its quiet trick for EU and Global in terms of price movements and consumption EU imports close to 160 bcm a 3rd of of it’s energy consumption from Russia A fraction of reduction is massive enough to send the global energy markets and prices into a disruption for long-term before transition to other methods and technologies It’s not surprising that the price could be in the range 100 to 145 not to add the cost of trade-offs in climate change and carbons The rest is technical analysis and market understanding but he is right on some point the best way is to transition and inn ate technologies and methods
It’s a contagion global Inflation will rise in the short to medium term you expert growth to fall in regions and moreso here in su Sahara Africa because of the significant in Global agro value chains in those huge markets of value because not only in fuel Russia together with Ukraine are major supplies of wheat and other agro inputs As it is there is a gold Rush for individual countries to assure these and not only fuel as the price impact is a distabilisation to individual economies growth prospects and Zambia will be impacted negatively he is right on some points
There is problem in the current methods of oil procuments and pricing you should also see the potential as Zambia and invest in oil and gas exploration and processing to be the next Russia or Ukraine The mistake is to think you can deligate energy security to third parties it’s wrong he is right on some points watching
It’s more than tension. There is a war going on. Fuel prices have gone up in nearly every region of the globe
The way this man is being showered with disdain just for being Russian trained is most apalling
Yet Russia is a super power with huge stakes in global affairs and with it an invicibility of capabilities many miles ahead of Zambia
We seem to suffer from a cancerous syndrome of colonialist minds induced by western dogma
Also guys remember his degree is Russian. Ahahahahahaha ,
So not surprised he is suppprting his 2years degree givers in Russia. Poor African – shame!