High Global Oil Prices Hurt Zambia …as fuel pump price hike looms
By Davis Mataka
The raging four weeks Russia / Ukraine conflict is having a devastating impact on the world economy as high oil and food commodity prices continue to spiral.
Third world economies especially non- crude oil producing nations like Zambia which are dependent on imports are bearing the brunt.
The Energy Regulation Board ((ERB) is likely to announce higher fuel pump prices by Thursday this week.
As the ripple effects of the war continue to reverberate around the globe, the price of a barrel of oil on the world market this week passed the US $100 dollars average mark and showing no signs of letting.
Crippling sanctions especially by the USA and west European countries have further exasperated the situation after they tightened imports of oil and natural gas from Russia causing a spike in prices by traditional Middle Eastern nation producers; all this in the midst of a bitter and debilitating European winter season.
Producers especially in the Middle East have so far resisted any increase in their daily output which is outstripped by demand and is sustaining the sharp rise in prices.
Zambia recently overhauled it’s model of crude oil purchases from suppliers on the international market after the Patriotic Front (PF) government failed to service a rising and staggering US$ 700 Million dollars crude oil debt.
In capping the unceasing drain of the elusive US dollar, government adopted a more realistic mechanism of cash payments to world supply markets, while setting of retail pump prices were now determined by reigning market trends which will be reviewed on a monthly basis.
The government also effectively cut out middlemen whose unrealistic mark -ups created artificially high pump prices compared to others in the region.
Energy minister Peter Kapala warned last week that Zambians must expect rising fuel prices because of the instability of supply caused by the war in the Ukraine.
Mr Kapala said that the prices of crude would remain high beyond March 2022.
“The price of crude oil will remain high above $US100 dollars per barrel
“The Increase in prices of crude oil and finished petroleum products was caused by robust demand against strained supply following the geo-political tension between Russia and Ukraine,” he said.
He said in the first quarter of 2022, the world had experienced an unprecedented increase and volatility in international oil prices adding that the price of crude oil had averaged $US 97. per barrel.
According to the United Nations Economic Commission for Africa (UNECA) Kristalina Georgieva outlines four possible impacts of the Russia/ Ukraine conflict on Africa which are higher food prices, higher fuel prices, lower tourism revenues and reduced access to international capital markets.
The Africa Business Insider, a Pan African business news forum cites the countries listed below as some of the most hard hit African nations with high fuel pump prices; Zimbabwe at $2.15 per litre, the Seychelles $1.54 Malawi at $1.43, South Africa $1.41 and Uganda at $1.39 per litre.
Others are Mauritius at $1.38, Burundi $1.34, Senegal $1.30, and Lesotho and Rwanda at $1.23 per litre.
In Zambia, fuel and food commodity prices are expected to continue rising sharply if the war continues unabated.