Fuel price cut too minimal to impact trade – ZIPAR

Zambia Institute for Policy Analysis and Research (ZIPAR) senior research fellow Caesar Cheelo says the fuel pump price reduction will have no impact on trade of general commodities because it is “too minimal”.

And Capital Buses proprietor Ishmael Kankara says his company is yet to decide whether or not to slash bus fares owing to the reduction of K0.86 and K1.22 for petrol and diesel respectively because it is still early.

Meanwhile, Kankara says the bus company wasn’t satisfied with the 22 percent increment on bus fares last year because they wanted them hiked by 40 per cent.

On Thursday, the Energy Regulation Board (ERB) announced the reduction of fuel prices from K16.06 to K15.20 for Petrol, K14.65 to K13.34 for Diesel and K16.94 to K15.72 for Low Sulphur Diesel, owing to falling international oil prices and the stable exchange rate between the kwacha and US dollar.

However, Cheelo observed that the fuel price reduction of K1 on average would have very little impact on consumers because price hikes in the past had been relatively higher.

He added the reduction in the fuel prices would have no impact on trade because the price margin between the old and the new cost was very minimal.

“It’s a minimal impact because the adjustment upwards in the past has been relatively higher and the transporters and whoever else is responsible for moving of commodities, when prices [of fuel] went up, they already made upward adjustments. The opposite is not going to be the case here because the change in fuel price is small. You can’t expect that transporters will pass on some of that price reduction to their customers by reducing their prices. They will keep their prices where they are. The cost of moving trade across the country [and] out of the country will stay the same despite the reduction in the fuel price… On trade, there won’t be any impact but may be on motorists, there will be definitely a small saving because you are talking about a K1 saving per litre,” Cheelo said in an interview.

He, however, said it was unlikely that bus operators would reduce the fares, adding that service providers tended to maintain high prices because they enjoyed them.

“It’s unlikely that they [bus operators] will reduce [the fares]. What happens is that service providers tend to hold on the high prices because they are enjoying the higher price. So if there is any saving to be had, they will try to hold on to that saving themselves as opposed to passing it on to their customers. So it’s the same thing for buses and commodity trade. And many people are probably preempting that because prices are moving up and down so quickly, they will probably be thinking that the prices will be changing very soon. So they will say [that] ‘there’s no way in us revising the prices when the price of fuel is going to go up very soon’. But there is very little impact for consumers,” said Cheelo.

And Kankara said transporters still needed to have talks with the Ministry of Transport and Communications because deciding on whether or not to reduce bus fares.

“We have not decided anything yet. It’s so soon. We don’t know yet whatever is going to happen. We might only know next week (this week). We still have to have negotiations and talks if they are going to be any,” he said.

Kankara disclosed that the company wasn’t satisfied with the 22 percent increment on bus fares last year.

“But then, we were still in negotiations with the Ministry [of Transport and Communications] the last time [of the] increment. If you remember, we had a meeting with the honourable minister [Brian Mushimba] and he requested that we increase by 22 percent. Then we had follow up meetings because we wanted 40 percent because that was adequate for us to run on 40 percent…,” said Kankara.

“We were anxious for the last six months since the last fuel increment but nobody listened to our anxiousness. We were crying that we can’t make our ends meet but nobody was listening to us.”

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