• Monthly fuel adjustment as of the second half of the year started having an inflationary pressure in the final Quarter.
• For most parts of the year, the cost of diesel was relatively higher than that of petrol.
• Between the months of July and September, there was a sharp decline in the prices of both commodities.
An Economist has observed that the removal of subsidies on petroleum products saw pump prices of fuel take an upward trajectory with fluctuations in between months in 2022.
Speaking in an interview with Money FM News, Emmanuel Zulu stated that this was mainly in response to prevailing market prices on the international market which were affected by the Russia/Ukraine War and the strength of the Kwacha against the US dollar.
Mr. Zulu explained that for most parts of the year under review, the cost of diesel was relatively higher than that of petrol.
“The sector regulator, Energy Regulation Board (ERB) effected a monthly pump price review mechanism which was premised on a cost-plus model so as to reflect the actual cost. This was arising from the fact that there are instabilities on the international market with regards the price of oil and the removal of subsidies needed to be reflected in the cost on a monthly basis and consumers needed to pay the actual cost. Of course it had its own pros and cons”
“For most parts of the year, the cost of diesel was relatively higher than that of petrol. Between the months of July and September, there was a sharp decline in the prices of both commodities mostly attributed to the appreciation of the Kwacha against the US dollar as Zambian Kwacha benefited from positive sentiments over its debt sustainability agenda upon reaching an agreement with the International Monetary Fund,” Mr. Zulu observed.
He noted that on 4th April 2022, Jesuit Centre for Theological Reflection (JCTR) had observed that between December 2021 and April 2022, the pump price of fuel had increased by almost K10 per liter.
“In September 2022, both petrol and diesel prices rose sharply with the price of diesel only being constant for the last two months. The sharp rise in prices from the month of September onwards could be attributed to the lifting of the tax waiver on petroleum products and the depreciation of the kwacha against the dollar towards the end of the year.”
Meanwhile, Financial Analyst Munyumba Mutwale observed that the monthly fuel review started the year shaking with fuel that was mainly coming in below the price expectations.
Mr. Mutwale however noted that in the middle of 2022, the prices harmonized showing that the monthly review met its goal of becoming cost reflective.
“The monthly fuel adjustment as of the second half of the year started having an inflationary pressure in the final Quarter especially in November and December, 2022,” Mr. Mutwale noted.
Energy Regulation Board (ERB) has been reviewing fuel prices on a monthly basis in line with its monthly pricing cycle which commenced in January 2022, to ensure cost-reflective pricing that is the height of securing the supply of petroleum products for the country.