Reports have emerged of some major Oil Marketing Companies (OMCs) who have opted to reduce on petrol supply due to lean profit margins occasioned by high landing costs relative to the Energy Regulation Board – ERB set retail prices.
Some OMCs employees have disclosed that the current erratic petrol supply of petrol in the country is due to a number of OMCs who have withdrawn or holding supply of petrol as they are discouraged by the thin margins that are compromising profitability.
When compared to diesel, most fueling stations are selling normally but Petrol has become unattractive for them. Diesel prices seem ok now as the commodity is being transported by the Pipeline since the operationalization of the TAZAMA pipeline.
A random check by the Zambian Business Times –ZBT in Lusaka between 20th and 21st June 2023, in some major fuelling stations, established that they had no petrol prompting consumers to complain over the matter.
Reacting to indications that an artificial fuel shortage has emerged, the OMCs Association President Dr. Kafula Mubanga said this is caused by lean margins due to high cost of transport in terms of road which has not changed for petrol and is unattractive for any investor to bring in petrol in the country hence the need for Government to work around incentives to balance the equation.
He noted that the incentives on diesel is such that the price of transporting the product via a pipeline has been reduced and this is why the country has many investors wanting to supply diesel because of the reduced transportation cost.
“This is arriving from the fact that you have a pipeline with more diesel being transported into the country and obviously the pipeline is not as expensive as the road transport. But we feel that this can be addressed in terms of a strategic plan by the Ministry of energy and it calls for a review on how they can create an incentive.”
The price of petrol was recently reduced by ERB to K24.45 from K27.64 a situation OMCs are saying is threatening their profit margins causing some companies withdraw from supplying to solicit government to provide incentives on petrol.
Dr. Mubanga explained that, on the incentives for petrol nothing has been done and government should seat back and review on the coast line and see what is workable in as far as bringing in petrol and still make it more competitive without necessarily discourage the OMCs from bringing the product in the country.
“What would have been interesting is for Government to look at how best they can work around petrol because obviously costs still remain high and the margins looks a little bit unattractive to OMCs thereby discouraging most of the OMCs from supplying the commodity.”
