Africa-Press – Zambia. Social Economist and business consultant Kelvin Chisanga says Zambia should revert back to the old system of reviewing fuel prices after three months.
Mr. Chisanga said the monthly review of fuel prices by the Energy Regulation Board (ERB) is costly to the business community. He observed that on business and investment fronts the new system doesn’t give stability in the prices of the commodities. Mr. Chisanga said the regular revision of fuel prices in Zambia is further negatively affecting the Oil Marketing Companies.
“Monthly fuel cost calculator, possible inflation driver. Out of curiosity and peculiar interest too, I have said this many times before that the monthly fuel cost calculator which the Energy Regulation Board (ERB) embraced in Zambia, as a key model of controlling availability of fuel and/or oil commodities, is costly in many ways. Firstly, on business and investment fronts it doesn’t give stability in the prices of the commodity. Secondly, it doesn’t have a sense of comfort in terms of security of supply with this crucial component of the productive element which is highly required at all sectorial levels considering the structural shape of our local economy,” Mr. Chisanga said.
He said there is also a need to increase the fuel storage capacities through private public partnerships (PPP) so that the nation can have outstanding security of supply.
“As it actually runs some losses on the part of OMCs as well due to many plethoras of factors that can be put for consideration, it is indeed now very difficult to make some sound business projections and to work on predictability of future investment patterns. There is a need for stakeholders to make some conscious decisions which should be bold enough to revert to three month procurement cycle, and also to work on increasing the fuel storage capacities through private public partnerships (PPP) so that the nation can have outstanding security of supply, if possible place in key productive areas of our domestic economy across the country,” Mr. Chisanga said.
He also proposed the removal of the fuel levy slapped on all petroleum commodities at the pump station. “Also, the government policy makers should disband “fuel levy” slapped on all petroleum commodities at the pump station, and turn this into “stabilization and recovery levy” to be used as a special cushion in cooling spikes from sudden price-growth, as it can be used for appropriate utilizations, especially as and when the markets tend to go in a negative direction with this essential economic commodity. On the inflation patterns, we expect the base effect to continue making some positive developments though with minimum impact towards the target band of 6-8% policy corridor,” he said.
“However, we have also noted that the Kwacha has continued sliding with some nominal loses due to the sustained effects being experienced in the supply factors, coupled with a pick-up seen with the demand which is emanating from the importers and corporate buyers, this is work contrary to the expectations despite the exporters and sellers making statutory monthly obligations. It is advisable to keenly observe these two factors, thus foreign exchange market fundamentals and oil price structural movements, so that we don’t spike inflationary pressure again like we saw last year,” Mr. Chisanga added.
He concluded:”Finally, it is well cognizant to state that there is still positivity and goodwill that are taking force, and this has given us a lot of hope considering the macroeconomic development seen so far from the number of reductions, we are also seeing being recorded in key economic variables such as inflation development, slow-paced movement in exchange rate and moderate activities observed with the trends of COVID-19 cases.”
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