Energy minister David Mabumba says in the next 60 days, fuel prices may reduce further or increase again, depending on the exchange rate and other economic indicators.
Speaking when he featured on ZNBC’s Kwacha Good Morning Zambia programme yesterday, Mabumba said the prices would continue to be reviewed periodically to ensure that the benefits of increased copper prices on the international market, the appreciation of the kwacha and other incentives are passed on to the end consumer.
“The wholesale and pump price of fuel is determined by two key fundamentals, one of them is the international oil marketing prices and the other one is the exchange rate because when you look between April and July, both these factors have marginally reduced on the international market. And then when you look at the exchange rate over a few months, I think the kwacha vis a vis the dollar has been performing very well so the two factors brought together collectively has contributed to the reduction of pump price in this country. We wanted to demonstrate to the Zambian people that as government, when we make certain pronouncements we need to keep them and I think in keeping with what we had said that fuel prices would be reduced within 60 days, and this time around as Zambia we are lucky that within that 60 days, the international prices and the performance of the kwacha to the dollar has been very significant, the kwacha to the dollar has been very significant,” Mabumba said.
“The kwacha has been appreciating, the international oil marketing prices have marginally reduced we’ve been paying between $45 to $55 per barrel so I think we have demonstrated to the Zambian people that we are a very honest government and in the next 60 days, ERB will be reviewing the pump price as well as the wholesale price of our petroleum products and my hope is that working together as Zambians, we need to sustain these indicators and I am grateful to our colleagues in the Bank of Zambia as well as our colleagues at the Ministry of Finance in terms of all the austerity measures that government has taken because you see, without these austerity measures, I am sure the kwacha wouldn’t be where it is. When you talk about removing subsidies, these are tough decisions but in terms of the benefits, it goes to the Zambian people. You and I today are able to go to a fuel station and buy fuel which is reasonable…If in the next 60 days the kwacha goes down to maybe K7, you should expect fuel to go down.”
He said government would soon engage business owners to make them understand that all reductions were significant no matter how minimal they could be.
“If you look at the cost of living, the cost of living, you have to look at a number of factors collectively, the decision that the Bank of Zambia made a few days ago in terms of reviewing the reserve ratio and monetary rate, those are also very fundamental decisions because the cost of living in this country will (not) only be able to go down because you have reduced one parameter in the economy, you have to look at other parameters but as you are aware again, the fuel price plays an important role in the price of fuel in this county and I think for me, I want to appeal to the business community that with this reduction, although it is not much, but if you were buying bread yesterday at K10 and you go into a supermarket today and you buy bread at K8.50, I think that, cumulative over a period of time, maybe over a month, it is going to give you some significant savings at household level and I think if every businessman in this country, our colleagues running the supermarkets, shopping malls were to pass this benefit to the Zambian people, we would see that in a few months from now, the cost of living would go down because fuel plays an important role in the transportation of goods and services in this country,” Mabumba said.
“If you compare the way the market performs in the western countries compared to here, in England, they can even give you a one percent increase in your salary because your employer knows that it will go a long way in meeting your expenses, paying little things like bus fairs and do fourth but we have a situation in this country, I think we have a market imperfection where our business community are not interested to pass the benefit to the customers and it is not a matter that we can resolve in true short term. We need addressing the minds of our colleagues who are running businesses in this country because in Zambia I’ve found that people want 100 per cent margins which you can’t get in the western world. And the market imperfection largely probably is because we don’t have significant completion as it is in Europe but going forward, we need to work together especially honorable (Margaret) Mwanakatwe to try and address the mindset of the people who are running businesses in this county that even with a one per cent reduction in terms of bread,in terms of a bus fare, that will go a long way in allowing a person who goes from Kalingalinga into Soweto to buy things on a daily basis, they can save a K2 over a period of two weeks or a month and it would go a long way to help them meet other expenses.”
And Mabumba explained that power cuts which some areas were experiencing were as a result of either planned or unplanned maintenance systems and not load shedding.
“Load shedding is not back. In any electricity marketing system all over the world, there is no system that is perfect…so every electricity system goes through a planned maintenance system and t also goes through unplanned maintenance system. So the planned maintenance system is where you see Zesco putting in the newspapers. So what is happening is not load shedding but planned maintenance systems or unplanned maintenance systems,” said Mabumba.