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Sunday, 20 April 2014

Fuels Prices Rise

ERB last week released the following press statement :

The Energy Regulation Board (ERB) has increased the pump price of petroleum products by 7.22% for petrol, 8.75% for diesel and 9.54% for kerosene, while wholesale prices have been adjusted by 11.15% with effect from midnight 17th April 2014.

The exchange rate of the Kwacha against the US Dollar depreciated significantly from K5.40 at the last price review in April 2013 to the current level of K6.20 to the US Dollar by 14.8% cumulatively. This cumulative depreciation of the Kwacha against the US Dollar has been the major trigger for this fuel price increase.

Pump prices are determined based on the cost of each cargo and the exchange rate of the Kwacha to the United States Dollar. In determining prices, the ERB uses the Cost Plus pricing model which operates on the principle that the final price of petroleum products should cover all costs in the supply chain.

An analysis of the March 2014 feedstock shipment done by the ERB, revealed that if prices did not change, a significant loss would be incurred on the shipment of feedstock for the refinery. To avert this loss as well as provide for adequate financial resources to sustain the continued purchase and supply of petroleum products, it became necessary to review prices at the pump.

In order to recover the cost of the cargo, the wholesale prices of Petrol, Diesel, Kerosene, Jet A-1, Heavy Fuel Oil and Liquefied Petroleum Gas at the Ndola Fuel Terminal would have to be increased by 11.5%. The uniform pump prices would change as indicated below:

PETROL
Current : 9.91
New : 10.63

DIESEL
Current : 9.20
New : 10.01

KEROSENE
Current : 6.83
New : 7.48

(Source : ERB)

Energy Minister Christopher Yaluma recently said :
There is no way in the immediate term the depreciation of the kwacha is going to impact the fuel, but should the Kwacha fall persist, then there could be some adjustment.
That statement was a week before last. I guess they expect the Kwacha to get worse or in his words "persist".

AUTHOR
Chola Mukanga | Economist
Copyright © Zambian Economist 2014

4 comments:

  1. Price comparisons sometimes help.

    Zambian mealie meal seems a lot cheaper than Zimbabwe.
    20kg of roller meal in Zimbabwe is about $13. In the previous post, you mention 25kg at K82 for 25kg. That equates to, at $1=6Kwacha, about $13 for 5kg more than Zimbabwe. Super refined mealie meal in Zimbabwe is about 20 percent more expensive than roller meal. So either way Zambia is much cheaper.

    Diesel. In Zimbabwe 1 litre costs about $1.43. The Zambian price, again at a rough$1=6k, equates to about $1.66, which is more than Zimbabwe.

    So mealie meal is very cheap but diesel more expensive.

    ReplyDelete
    Replies
    1. But we are in Zambia!

      The best comparison is the YEAR on YEAR change.

      Delete
    2. Of all countries you honestly have the audacity to pick on Zimbabwe as a yardstick? SMH..

      Delete
    3. It is an interesting regional comparison and yardstick not audacious. Zimbabwe is probably the poorest country in SADC so why not make a comparison.
      What are they complaining about this food is cheap, is the point. Remove the food Ngo's, increase productivity and it will become even cheaper. Some people seem to want food for nothing; even some people with fields. Zimbabwe is talking about banning food aid imports because it is causing lack of production and this year is a bumper season. However some are already exposed and asking where is the Food for Work program. The food rights, food security movement needs to be changed into the food responsibility movement. People are responsible for feeding themselves not someone else, especially if they have fields. Dependency needs to be addressed.
      The diesel is expensive is the other point. So shut down Ndola or fix whatever is causing this price of diesel. Zimbabwe imports finished fuel products. Try that.
      Zimbabwe's collapse has resulted in an unintended experiment in neo-liberalism. The people don't look to the government but battle away trying to solve the problems themselves. Zambia seems to still look to the government about food. What has a government got to do with food. It is the language of dependency. Bring on the language of personal responsibility.

      Delete

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