The Oil Marketing Companies Association of Zambia has hinted that some reported incidences of persistent withholding of fuel in some parts of Lusaka and some fueling stations could be as a result of some Oil Marketing Companies- OMCs holding on to the product because of the tight profit margins which are not attractive.
Some oil marketing companies in some parts of Lusaka have opted to withhold their fuel and are telling customers that they have run out of stock when actually not. This is after the Energy Regulatory Board – ERB adjusted Fuel Prices Upwards by about 11%. For Petrol, the price has increased from K24.49 to K27.22 per liter and for Diesel from K26.44 to K29.85 per liter.
Reacting to indications that an artificial fuel shortage may emerge, the OMCs Association President Dr. Kafula Mubanga said OMCs have strived for some time with the tight profiting margins which has not been so attractive. He revealed that in January 2023, OMCs were making less than a Kwacha per liter, a situation he said was hard for business.
Dr. Mubanga said, “as of last month they were making less than a kwacha per liter which was a bit tough for business to run meaning the profit margins were not very attractive but of course with this review, we hope that we will have a little bit of an attractive margin that will inspire OMCs to bring in oil”
He said the current fuel pump price in the long run threatens national supply in terms of availability of the various oil products. “because you anticipate that these tight percentages of margin may lead to erratic supply, If our national storage levels are below 30 days of average demand volumes, it becomes a concern and the minister should be able to ensure that the national stock is reserved for at least not less than 15 days in the country.”
Dr Mubanga stated that OMCs are not able to sustain their businesses if they bring in fuel at UN profitable margins. OMCs have since appealed to government to continue consulting with OMCs in arriving at some of these key decisions. He however hoped that erratic supplies before and after the announcement of monthly fuel pump prices will normalize. We look forward to Government relooking at coming up with a slightly moderate pricing structure that will be more attractive for OMCs going forward.
Government has adopted a monthly fuel pump price review, a move that seems to be at odds with most businesses and households who prefer a historical quarterly review.