• This may be considered as an alternative sourcing option with establishment of the African Continental Free Trade Area.
• Government should also consider entering into long term purchase agreements with the suppliers.
• The increase in fuel prices means budgetary allocation to personal and public transportation will increase.

Consumer Unity and Trust Society (CUTS) has advised Energy Regulation Board to use a quarterly pricing cycle to revisit fuel pump prices to allow consumers to effectively plan for their quarterly transactions and to prevent disruptions in economic activity in the case of unforeseen shocks.

CUTS Program Officer Allan Chitamwali recommended that the quarterly pricing cycle be accompanied by an appropriate smoothing mechanism to protect consumers from volatile price movements.

Mr. Chitamwali further noted government should consider sourcing fuel from neighboring and African oil-producing countries as this may be considered as an alternative sourcing option with establishment of the African Continental Free Trade Area (AfCFTA).

He added that Zambia can take advantage of the formation of non-discriminatory tariff-setting and simplified customs procedures help to facilitate cross-border transactions for electricity and fuels.

“This will eliminate the costs incurred in acquiring fuel from far off places whose price is inflated by logistical costs and mark-ups by middlemen,” said Mr Chitamwali.

“The government should also consider entering into long term purchase agreements with the suppliers that will lock in the price for a longer period and will be unaffected by the price changes in the global supply chain,” he said.

Mr. Chitamwali who said “Fuel is an important economic input that is at the centre of all economic activities,” stated that steep fluctuations in fuel price and high importation cost for a ‘land-linked’ country like Zambia has potential to distort macroeconomic indicators such as inflation, interest rates, and exchange rates as well as the cost of living and doing business in the country.

He pointed out that the monthly pricing review has shown in the last couple of months how unpredictable fuel prices can be, considering extraordinary circumstances in the geopolitical landscape, the volatility in the global prices will make sourcing and stocking of fuel very difficult.

“In Zambia, as a result of the instability in global and local fuel prices, a challenge that has emanated from this is that of fuel hoarding as suppliers have been looking to maximize their profits when they sell their stock at the adjusted petrol prices,” said Mr Chitamwali

He further highlighted that unpredictability in the pricing and stocking levels and is likely to put pressure on the price of goods and services both from imports as well as our exports as exporters on either side of the border try to account for their increased cost.

The CUTS Program Officer further elaborated that at a household level, the increase in fuel prices means the budgetary allocation to personal and public transportation will increase.

He stated that disposable income, as well as savings, may be affected further impacting negatively on the consumer’s ability to plan for and purchase goods and services.

“This coupled with the high cost of the Basic needs and nutritional basket which stands at K9, 305.38 for the month of February 2022, representing a K256.13 increase in comparison to the January, 2022 basket which stood at K9, 049.25, the cost of living is unsustainably high,” Mr. Chitamwali noted.

He added that, “households will be unable to meet their daily food requirements and will be at risk of falling further into poverty.”