The government yesterday announced a five per cent fuel price hike effective midnight, with a litre of petrol now selling at K15.98 from K15.20.
A liter of diesel will be sold at K14.23 from K13.43, representing an increase of K0.80.
Low sulphur diesel is now K16.52, up from K15.72 per liter while Kerosene has recorded the highest price hike from K11.34 to K13.02.
Energy Regulation Board (ERB) chairperson Raymond Mpundu announced the price increase at a media briefing in Lusaka today.
He attributed the price hike to the increased volatility of the local currency and the prevailing international oil prices.
“The last review of pump prices of fuel which resulted in changes at the pump was a price reduction on 28th February, 2019. However, prices were subsequently reviewed on 15th April 2019 and 14 June 2019, but fuel prices were not adjusted as the volatility in the economic fundamentals, notably the exchange rate, made it inappropriate to effect an adjustment… The prices are reviewed only after each consignment has been fully consumed and a new one arrives,” Mpundu explained.
“Specifically, from January 2019, the price of Murban crude increased by 8.21% from an average of US$60.75/bbl to an average of US$65.75/bbl in September 2019. During the same period, the Kwacha depreciated by 10.03%, from K11.96/US$ in January, 2019 to K13.16/US$ in September 2019. In view of the fore-going, the pump prices for petroleum products have since been revised upwards as reflected in the table below. The new prices are to take effect today 23rd September, 2019 at midnight. Members of the public should be on the lookout and report any retail facilities that hoard fuel between now and midnight, to the ERB through the toll free line 8484. Meanwhile, in view of recent developments in the Middle East, the ERB is closely monitoring the situation and shall inform the public if the next cargo imported into the country would be affected by the recent attacks on key oil facilities.”
He explained that despite an appreciation of the kwacha and reduction in oil prices, two fundamentals have not been favorable from the last fuel price adjustment in February 2019 up to this month (September).
“From February to August, 2019, the kwacha depreciated while international oil prices continued on an upward trend. However, between May and July 2019, the Kwacha appreciated while international oil prices declined. Overall, the two fundamentals (international Oil Prices and the exchange rate) have not been favourable from the last fuel price adjustment in February 2019 up to September 2019. Therefore, the two factors have had the combined effect of increasing the domestic wholesale and pump prices beyond the 2.5% trigger band,” said Mpundu.
“The energy regulation board has reviewed the wholesale and pump prices of fuel for the most recently imported cargo of petroleum feedstock and finished petroleum products. In line with policy direction to migrate to cost reflective pricing – of energy products and services, the ERB has revised the pump prices of petroleum products upwards. The fuel price adjustment is based on the review of the following cargo: in August 2019, the government of the Republic of Zambia (GRZ) imported 99,983.34 metric tones of feedstock cargo and in addition, government imported finished petroleum products. That cargo of finished petroleum products comprised 34,073.63 cubic metres of petrol and 70,000.52 cubic meters of diesel.”