ENERGY Regulation Board Chairperson Reynolds Bowa says with the ongoing war between Russia and Ukraine, it is hard to predict when exactly the country might begin to experience stabilised fuel prices.

And Petroleum Transporters Association of Zambia (PTAZ) president Benson Tembo says the increase in fuel prices is a disaster for transporters, calling for regulation of transport rates for transportation of fuel.

In an interview, Friday, Bowa said the stabilisation in fuel prices might only begin to occur when the commodity begins to fetch between $120 and $130 per barrel.

“It is hard to say but the course of life is that things happen, things go wrong and over time things stabilise and tend to get overtaken by newer events. For example, in about January last year, we came into this Covid situation and Covid dominated all events and decisions for the next 12 months or so and in the end, it still hasn’t gone away. It is managed by vaccination but also it’s been overtaken now by the war in Ukraine. We don’t talk about such that much, we talk about the factors being more influenced by the war,” Bowa said.

“So what I expect is that over time, things will settle down and will reach some equilibrium in price and the price will stay stable there for some time until some other extraordinary events occur. So I expect that what should happen is that probably the price will stabilise somewhere between $120 and $130 per barrel. But it is not something that anybody can be sure about but that is my expectation.”

Bowa said the US government’s decision to release a million barrels of fuel into the market on a daily basis will have a stabilising effect.

He added that things that could have a significant impact on the cost of fuel were outside of the control of Zambia, as things stand.

“I think that all of the things that can have a significant impact on the cost of fuel as things stand now are outside of the control of Zambia or its government. But others who will have influence on it will probably be able to cause the change. For example, you have heard about the American government starting to release strategic reserves. So they have taken a decision to release a million barrels of fuel into the market every day for the next six months. So that should have a stabilising effect. It is a million barrels which wasn’t in the market before and because they are trying to cushion their people but because of the size of the market that impacts the world price,” Bowa said.

“Similarly, because there were sanctions on Iran and Iran is a major supplier of oil, the sanctions are going to be relaxed. They will find some kind of agreement to bring Iran back into the market so that will have the effect of stabilising the prices. High prices are bad for business all over the world so those with the capability and influence will do what they can to reach stability and over time that stability will be established. That is why I was saying even if the war continues beyond six months from now; the price will have found some stability point.”

He insisted that monthly fuel price reviews would continue.

“For the time being, the monthly price review will continue. In fact, this is the time at which we need the monthly reviews more than before when the prices were more stable. The consumer views it from a point of view that they would like a price that is held stable for a long period of time, that is understandable because it allows them to plan. However, the suppliers have to track as closely as possible the international oil price and our job is to find a price somewhere in between which will guarantee the availability of fuel whilst still keeping the price of fuel as low as possible for consumers. And so, the only way we can do that in an unstable market is to review prices frequently and one month is what has been determined as international best practices,” said Bowa.

Meanwhile, PTAZ president Benson Tembo said the increase in the price of fuel was a disaster for the transporters.

“For us, I think it’s a disaster because we cannot just handle it. And we quickly need the intervention of the Energy Regulation Board to try and regulate the transport rates for transportation of fuel. We know that they regulate the local distribution to retail sites but we want them to extend it to transportation to commercial sites and transportation of imported fuel. We really want them to regulate that because it will be very difficult for us to find a common ground with oil marketing companies or the government contracted suppliers,” Tembo said.

“We have seen that most of these multinational oil companies are here to make money and will have experienced it that they always want to hide in the name of competition but in this circumstance, we cannot talk about competition. Zambians cannot cope, we have seen the dominance of foreign transporters and we will see more of that because this increase does not affect the foreign transporters. So the oil marketing companies and the government contracted suppliers will opt to use the foreign transporters and Zambian transporters cannot manage this transportation with the rates that are applying today.”

He said the increase in fuel prices was inevitable but insisted that government must intervene and regulate the transport rates.

“This fuel increase I think it has hit us under the belt. We cannot stand; we know that it is necessary to do that increase. There is nothing we can do as a country but the only thing that we pray for and we hope to get out of this is that government comes in to regulate the transport rates so that people comply to the enforcement or to statutory instrument number 35 which has provided that at least 50 percent of all imported or all bulk and heavy commodities to be transported by Zambian citizens. We don’t want to go out there finding it difficult because even now we are finding it difficult to find a common ground on transport rates with oil marketing companies and government suppliers,” said Tembo.

“So our call is for the immediate intervention by the Energy Regulation Board to regulate the transport rates because they understand the markup for a transporter in the transportation of local fuel and in the distribution. They understand the markup of an oil marketing company, they understand the markup of a dealer who is a filling station, and they also understand the markup of the government contracted supplier.”

Reacting to this, Bowa assured that ERB remained open to listening to the concerns of the transporters.

“I think it is a consultative process, we recognise that the impact on transporters is direct and immediate and it impacts all transporters and not just transporters of fuel. Now to the extent that the component of cost to transport in the fuel price goes up, it has to have the effect of increasing the price again – the price of fuel. And this is something that we are trying to avoid. So it is a delicate balancing act between supporting business to be able to intervene and minimise the prices, keeping the price as low as possible for all consumers. So we will discuss with them, listen to their concerns and examine possible solutions,” assured Bowa.