The Oil Marketing Companies Association of Zambia (OMCAZ) expected fuel pump prices for November 2022 to be maintained or adjusted downwards, but the Energy Regulation Board – ERB has announced an upward adjustment, perhaps demonstrating the widening expectations gap even between the industry players and the regulator.
Speaking in an exclusive interview with the Zambian Business Times-ZBT before the adjustment was announced, OMCAZ President Dr. Kafula Mubanga explained that OMCs are not expecting any upward adjustment for fuel prices from ERB owing to the fact that the Kwacha has been performing very well in the last few months.
Dr. Mubanga said [crude oil and finished petroleum] prices on the international market have not been escalated, in which case – it is anticipate that there won’t be any price adjustment adding that hopefully it will be maintained on the same trajectory or possibly adjusted downwards.
He said given the fundamentals of the market where the Kwacha performed well and the oil prices on the international market has not escalated, it is hoped that this will be able to result in the maintenance of the price or having prices adjusted downwards.
“You anticipate that with any adjustment upwards it comes with its own effects on businesses the cost of doing business is most likely higher but we hope that this month the government should look at the accrued benefits of Kwacha on the international market against the US Dollar and then be able to adjust the cost downwards or maintaining the cost given the fundamentals.” He said.
However, ERB announced a whooping 20% increase in Kerosene prices, a 7% and 5% increase in both petrol and diesel. This has left many stakeholders wondering why the prices have gone up. ERB is yet to release the breakdown or cost build up computation for a further detailed analysis.
And on the expected impact on pump prices following announcements that fuel blending will now be allowed in Zambia, Dr. Mubanga said the announced blending by the Minister of Energy Chibwe Kapala provides direction which if well implemented, can help reduce the pump prices in Zambia.
He however urged government to put in place specific measures that will prevent illegal and sub-standard blending, so that there is no illegal practice around it. “That the window will give us the feel of what sort of product we are going to have at the end of the day and that we can progress to blend more than the initial 10%”.
Stakeholders that include businesses and households have complained of the exhausting monthly fuel price adjustment which ERB and the Ministry of Energy insist is working for everyone, but some say it’s may be working for the government but not for its people or citizens.
