TODAY, I revisit the issue of fuel prices particularly because of the marginal decrease in the cost of the commodity announced by the Energy Regulation Board (ERB) recently.
A fortnight ago, ERB announced that due to plummeting crude oil prices internationally, it decided to reduce uniform pump prices per litre for petrol, to K10.38 per litre from K10.63 per litre and diesel to K9.73 per litre from K10.01 per litre.
ERB stated that the cost of kerosene had also reduced to K7.21 per litre from K7.48, per litre.
The move by ERB came in the wake of unwavering pressure from consumer right groups who contended that it was illogical for fuel prices to remain high locally while crude oil prices plummeted internationally.
The Kwacha had also picked up and was performing well against convertible currencies such as the United States Dollar, which is also monitored performance wise when ERB sets the pricing mechanism for fuel.
Therefore, it was necessary that ERB acted to address the high cost of fuel which was becoming out of the reach of ordinary consumers especially after the removal of subsidies.
The Zambia Consumer Association (ZACA) has however not appreciated the decrease in fuel prices describing it as negligible because it does not favour ordinary consumers.
ZACA executive director Samuel Simutunda told Beyond the News that the reduction in the pump prices for petroleum was too minimal and offered consumers little or no benefit.
Consumers Unit Trust Society (CUTS) International Zambia centre coordinator Simon Ng’ona shared the same concerns saying, the decrease in the pump price of petroleum did not correspond to market forces locally and internationally.
Mines, Energy and Water Development permanent secretary Charity Mwansa however defended the move by ERB describing it as logical owing to the costs incurred in the procurement of petroleum.
Ms Mwansa said when coming up with the new price for fuel, ERB applied a model that took into consideration the procedure involved in importing the commodity from the Middle East into Zambia.
Both the Government and those speaking on behalf of the consumers have valid points to back their arguments.
The cost of importing fuel from the Middle East for landlocked countries like Zambia is colossal when compared to countries that have port facilities where the commodity can dock.
This is why countries like South Africa have been able to reduce the local price of fuel consecutively in the period that global crude prices have been at their low.
It was difficult for ERB to effect a higher reduction margin because Government is already incurring huge costs to ferry the commodity from the source to the port and into the country.
Government however needs to find short-term means of cushioning this consumer burden as the impact of high fuel prices has direct and indirect effects.
The high price of petroleum has an all-round adverse effect on the economy because activities across many spheres revolve around fuel consumption.
High fuel costs add to the overall cost of doing business and this undermines growth in sectors such as mining and manufacturing as it reduces the capacity for industry to grow.
Bus and taxi operators are already constrained and the marginal decrease in the cost of fuel does little or no good for commuters as fares on the local and inter-city routes remain high.
Farmers are also incurring high transportation costs for their commodities and they too will have no option but to increase the price of produces such as crops and livestock products.
Government can explore other sources of raw crude oil such as neighboring Angola as the cost of importation will be greatly reduced.
There is also need to eliminate middlemen in the fuel transportation chain because it is costly to maintain their presence in the distribution process.
In the long-run, fuel pump prices could decline albeit marginally on account of expected appreciation of the Kwacha against major convertible currencies and cooling crude oil prices internationally.
But measures should be taken to ensure that the price of petroleum remains within optimum range for the ordinary consumer to afford.
Hopefully, the nine companies that have been engaged in oil and gas explorations will find the resource locally, which can propel the country to start producing its own fuel in place of imports.
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