The Zambia Chamber of Commerce and Industry (ZACCI) has called on Industries to fully plan for the newly introduced fuel pricing model adopted by the Energy Regulation Board (ERB).
ZACCI President, Chubuka Kawesha said the new ERB pricing model will grow fuel petroleum market space and support the process of partial to fuel liberalization of the fuel sub-sector.
Mr. Kawesha said that the partial liberalistion raises concern and there is a greater risk and loss if they keep overturning advancements that promote full liberalistion for the private sector to eventually obtain broader latitude both up and down stream in the fuel petroleum sub sector.
He noted that fuel like electricity and telecommunication is the catalyst of any economic activity and is a critical production enhancer in all sectors of the economy.
“The country must stand steadfast as we urge that government should work at streamlining the fuel procurement process and plan its exit in the procurement value chain by cutting off middle men and allow independent licensed investors and oil marketing companies to import fuel products,” Mr. Kawesha said.
He further said that as it progresses the underlying regulatory reform measures must promote conducive and manageable tax levels as well as regulatory fees.
Mr Kawesha noted that the country needs to expedite the development of region fuel supply opportunities and the exploratory opportunities to this value chain covering transportation.
“We take this opportunity to call upon ERB to scale up visibility of investment opportunities for prospective investors across the full value chain of large medium and small scale refinery opportunities,” he said.
Mr Kawesha since called upon the ERB and other private sector to rollout an electric-motor or electric-vehicle investment roadmap which will incorporate local electric-battery development.
Meanwhile, Minister of Energy Peter Kapala has said that there is no intention to go back to quarterly or yearly reviews of fuel pump prices.
In a statement to the media, Mr Kapala said that his ministry has adopted a monthly review of fuel pump prices in Zambia because it is better than a quarterly review, which lags behind in passing on the benefits onto the users when there is a drop in real costs and international prices.
Below is the full statement
We have adopted a monthly review of fuel pump prices in Zambia because it is better than a quarterly review, which lags behind in passing on the benefits onto the users when there is a drop in real costs and international prices. This week, we have seen fuel pump price increases in many countries. But because these countries don’t review their prices regularly, they missed a chance to reduces prices last month when Zambia did.
I wish to assert that there is no intention to go back to quarterly or yearly reviews of fuel pump prices. The country has tried long term review cycles before and we ended up with large fuel price increases and a very large government debt from unpaid fuel bills. This was due to the fact that the government couldn’t sustain subsidies and couldn’t pay suppliers on time. Delaying price reviews doesn’t make the problems disappear. This only compounds the problem, like papering over cracks on a wall.
Whereas some businesses and entrepreneurs are complaining about disruptions in their planning, especially in the short-term, they cannot deny the fact that the same businesses will enjoy instant savings when a reduction in pump prices has to be effected due to a drop in international prices of the commodity or a favourable change in inflation or currency exchange rates.
As a government, we appreciate the fact that the greatest risk to the country, in terms of fuel, is security of supply. The only way we can assure security of supply is to make sure we match – as closely as possible – all movements in the exchange rates and international oil prices. If we don’t do so, we shall then be second-guessing these movements. What will then be prevailing at the pumps will not be real prices but guesswork. And any attempts to pre-empt price movements before they actually occur would result in prices that are excessively high and punitive to the public or too low to the point that someone has to then subsidise the price. This would then defeat the whole purpose of removing subsidies and having cost-reflective tarrifs, prices and fees within the energy sector.
The reality on the ground is that the supply chain and cost-factors of fuel have changed from what they last month or the month before. There is now a war in Ukraine involving Russia. Russia is a major supplier of fuel in the world. This war with Ukraine creates instability in the supply of Russian oil. For example, sanctions have been imposed on Russia by the North Atlantic Treaty Organisation (NATO) members and these sanctions include blocking Russian ships from disgorging fuel at ports in places like the UK albeit the Russian oil itself hasn’t been embargoed. With possible reduction in Russian oil available on the market, it is not surprising that all this has, consequently, led to the increase in world fuel prices. This increase in world oil prices directly affects fuel pump prices in Zambia in a not-so-positive way. Compounded to this is a slight depreciation in the exchange rate of the Zambian Kwacha to the dollar in the last month.
As the New Dawn Government, we are strongly resolute in serving all 18 millions zambians and will not take actions that are seemingly porpular but do not work for the common good and the sustainable growth of the Zambian economy. Be assured that we do pay attention to all concerns but we will always soberly reflect on what is needed to move the nation forward. Monthly reviews are part of that needed blueprint.
It is for this reason that I wish to discount all suggestions that the reduction last month was politically motivated. Anyone who cares to check will see that last month, the Kwacha was slightly stronger and Brent Crude prices were lower.
Good morning.
Hon. Eng. Peter Chibwe Kapala
Minister of Energy
Dr Kawesha why don’t you fight this out instead of giving in. Surely how can you plan on a hand to mouth policy.
I have been keenly following chella tukutas photography since he became president’s chola boy. Especially around the photos he takes of the first lady. Those are photos taken by someone in love with a woman. You cannot capture thr first lady so perfectly. I can tell those are pictures taken by a man in love. Can the president keep an eye on his wlfe because we don’t want scandals
Awe ni kapala, as his name suggests. Dubious!
@Dejavu what is there to fight? A barrel of oil is increasing every day. It is was $115 per barrel when the markets closed on Friday. Perhaps you can share with the country and the rest of the world how you can keep the price at the pump constant for a commodity whose price is creeping up every day. Start living in the real world rather than expecting to pay artificial prices for life’s essentials.
#4 Anyana.. with or without the Ukrainian fiasco GRZ were going to increase the price of fuel. My contention is not what the war has affected…. it’s this MONTHLY ADJUSTMENTS… As far as I am concerned they can even sell at 30 Kwacha per liter as long as it stays there. As for the barrel price, no need to remind me, I am following this both on TV and internet. By the way the fuel we are buying wasn’t bought now.