The Energy Regulation Board (ERB) has reduced the wholesale and retail fuels prices effective midnight tonight.
ERB Board Chaiperson Raymond Mpundu announced this at a press briefing today.
“For wholesale prices petrol has been reduced to K6, 542. 49 from K7,254.65; Diesel has been reduced to K6, 356.56 from K7,079.05; and Kerosene has been reduced to K5, 150.73 from K5,525 per cubic litre,” Mpundu said.
“Retail prices per litre; Petrol reduced from K12.50 to K11.67; Diesel reduced from K10.72 to K9.87; and Kerosene reduced from K6.81 to K6.50.”
Mpundu attributed the reduction to a gradual reduction in international oil prices as well as the good performance of the Zambian Kwacha against the United States Dollar.
“Fuel prices in Zambia are largely determined by two factors; international oil prices, and the exchange rate of the Zambian kwacha against the United states Dollar. Notably, the last fuel price adjustment was effected in January 2017. In between, the government has made two importations of both petroleum feedback and finished petroleum products. However, there was no price adjustment effected on those importations as they were both below the trigger threshold of 2.5%,” Mpundu said.
“With regard to the exchange rate, there has been a sustained appreciation of the Kwacha since the last adjustment. For example, in January 2017, the Kwacha traded at K9.60 per US$ compared to just about K9.00 per US$ by midyear of 2017. The strengthening of the kwacha was largely influenced by increases in the international copper prices, companies converting foreign exchange into local currency in order to meet their tax obligations and inflows from offshore investors for the government bond auctioning.”
Mpundu said fuel price adjustments could only be implemented if wholesale prices rose or reduced by more than 2.5%.
“In line with the cost-plus model that is currently used to set fuel prices, the Energy Regulation Board has reviewed the current wholesale and retail fuel prices based on the most recent importation of petroleum feedback and finished petroleum products. The decision to review prices is also in line with the policy guidance that fuel price adjustments will be made periodically as fundamentals that determine them change,” said Mpundu.
“Between the last adjustment and July 2017, there has been a gradual reduction in the price of petroleum products on the international oil market. This has been on account of excess oil supply and fairly high oil inventories. For example, the price of Murban crude oil which is mostly used in Zambia moved from US$56.60 per barrel in March to US$47.86 per barrel in June 2017.”