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:PETROLCurrent : 9.91New : 10.63DIESELCurrent : 9.20New : 10.01KEROSENECurrent : 6.83New : 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".
Chola Mukanga | Economist
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