Oil Marketing Companies Association of Zambia (OMCAZ) says the Energy Regulation Board-ERB should inform the public what formula it is using to come up with the monthly fuel pump prices.
Association President Dr. Kafula Mubanga explained that it is surprising that the fuel pump price has been adjusted upwards when the price of crude oil on the international market was coming down last month adding that as of today, a barrel of crude oil is costing around $105.
Speaking in an interview with the Zambian Business Times-ZBT, Mubanga said crude oil prices were around $110 a barrel in May and ERB only increased the price of petrol by K0.80 but now that the crude oil prices are around $105 a barrel, ERB has increased fuel prices for petrol, diesel and kerosene by a bigger margin.
“We really do not know the formula that ERB is using, is it taking the behaviour and the performances of the market towards the end of the month in terms of its final week and that becomes the basis of adjusted prices. We need to all understand where ERB is coming from, is it taking in the pricing towards the end of the month, what formula are they deploying to come up with that, that’s the biggest challenge”, he said.
Mubanga noted that guiding the public on what the ERB puts into consideration when coming up with the prices would assist the public to know what to expect every month unlike the current situation where it seems like ERB determines the price without considering the price of crude oil on the international market.
“So then government must justify this particular adjustment, it should give you a comparative analysis because you will find that this month might be the lowest in terms of crude oil prices on the international market, it doesn’t make sense”, he said.
He noted that the association has written to the Ministry of Finance concerning the institutionalization of a national oil marketing company, which is enforceable by law and will help address the various issues the country is facing as a national oil company holds the rights in as far as expanding the portfolios of exploration of oil and gas is concerned.
“It will also be able to aid ERB and the ministry in as far as pricing structures are concerned, they will have an input and also come up with solutions as a state owned company. It gives it mandate to negotiate with people who can explore gas and oil something that we have not taken keen interest in as a country from the time the reserves were discovered in the country, we do have deposits of oil but we need a political will”, he said.
