Consumers to save K1.5bn from fuel price drop, says Dr. Johnstone Chikwanda
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Consumers to save K1.5bn from fuel price drop, says Dr. Johnstone Chikwanda
Since April this year fuel pump prices have been steadily falling and this will lead to petroleum products consumers saving an accumulated K1.5billion, reports *Francis Lungu* .
Giving an analysis on the downward trend of fuel pump prices observed in the last three months, international energy expert Johnstone Chikwanda says in the month of April alone, the reduction in petroleum products prices resulted in consumers saving about K940million.
This was followed by another K164millon saved due to the drop of prices in May, according to Dr Chikwanda.
“For June the consumers will be saved K400 million. So by end of June the consumers will be saved a total of about K1.5 billion. This is a massive saving by consumers. It will also improve return on investment by the OMCs (Oil Marketing Companies) due to reduced import bills due to reduced prices,” he noted in a statement after the Energy Regulation Board (ERB) had earlier announced the fuel pump price reduction for the month of June.
In reacting to sentiments from some circles of society insinuating that the reduction for petrol for instance from K27.59 to now K24.45 should not be commended because the pump price was at K17 when the United Party for National Development (UPND) took over government, Dr Chikwanda explained: “Yes the pump price was found at K17 but that was an artificial price for two years due to waived taxes at 25 percent customs duty, 16 percent VAT (Value Added Tax) and Excise Duty. In total over 41percent on fuel had been frozen to artificially make the prices look low. In addition government was directly giving OMCs about US$64m every month in order for them to land fuel in Zambia profitably as they opted to stop imports.”
The energy expert noted that the combined implication of the previous happenings in the petroleum sector was costing government treasury about US$1 billion per year.
‘We also had an accumulated debt to OMCs of US$800m as we were unable to pay because fuel was being sold at a low price,” he noted.
ERB board chairperson Reynolds Bowa said the reduction in the national uniform pump prices and posted airfield prices were influenced by a combination of factors on the international market.
“The factors that caused the decline of oil prices included the concerns about a looming recession that affected the oil and gas markets. Fear of a banking meltdown following the collapse of some Western banks also created additional uncertainty,” he said.
For the month of June the ERB board chairperson said fuel will now cost K24.45 from K27.59 for petrol per litre while diesel will be going at K21.87 from the previous K24.64.
Kerosene has been reduced from K20.47 to K19.74 while Jet A-1 at Kenneth Kaunda International Airport has dropped from K22.60 to K21.64 per litre effective midnight May 31, 2023.
And some Lusaka motorists talked to thank President Hakainde Hichilema and the new dawn government for closely motoring the happenings on the oil international market and swift reaction to respond by adjusting fuel pump prices downwards.
“At least now I can get four (4) liters [of petrol] from a K100. This is good for us as motorists who are in transport business. Government is doing a great job,” said Simon Njovu, an online tax operator under Yango.
Another motorist Evelyn Mpande, a mother of three school going children said the reduction in fuel pump prices will have benefits at household level as school errands will now be manageable and affordable.
