• The matrix that Zambia uses to determine the price of fuel include price of international crude oil as well as exchange rate.
• The price of crude oil on the international market has dropped slightly over just US$100.
• The Kwacha which was closer to K18 has now dropped to K16.
An Economist has projected a reduction in fuel prices during the next monthly price review of the commodity.
Speaking in an interview with Money FM News, Trevor Hambyai said this is because there have been positive indicators in the two factors that determine fuel pricing in Zambia which are crude oil prices on the international market and performance of the Kwacha.
Mr. Hambayi noted that the price of crude oil on the international market which had hit US$ 117 a barrel has slightly reduced to over US$100, while the local currency which was closer to K18 has now dropped to K16.
He added that if Energy Regulation Board (ERB) will use the above factors to determine the price of petroleum products on the local market, then there will be a reduction in the prices.
“There are two sides in terms of expectations for the price of fuel, the matrix that we use to determine the price of fuel include the price of international crude oil as well as our exchange rate. If you are looking at the month of April as it has been, there have been positives in both areas.”
The price of crude oil on the international market had hit US$117 a barrel that has dropped slightly over just US$100, that has been the positive. The second aspect obviously is our exchange rate, it was closer to K18 but it has now dropped to K16. If those are the matrix that we are going to apply, we expect that we will have a reduction in the price of the commodity on the local market,” Mr. Hambayi said.
Mr. Hambayi also said there is a potential that last month’s price increase was not the full value of what it should have been.
“It was reduced to be able to mitigate the impact of having to increase and if they had decided to say that we are only going to have a partial increase and then will do this additional increase the next month, then we have a different challenge that it might not reduce, but technically if you are using those two matrix on a monthly basis as we have been given, we expect that there should be a reduction,” he added.