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Zambia’s Energy Regulation Board (ERB) has been urged to make the pricing template for petroleum products transparent and public to enable Oil Marketing Companies (OMCs) plan effectively.
This will help the OMCs to avoid taking in huge losses once the pump price of petroleum products are adjusted downwards.
An industry player who chose to stay anonymous told Zambia Monitor in an interview that ERB should make the pricing template transparent and public so that the OMC can plan effectively.
He suggested that the OMCs must be able to use a transparent template to work out what the pump price would be every month, saying that this should not be a secret or left to the absolute discretion of ERB.
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The current pricing mechanism leaves too much room for product insecurity and potential scarcity of products, he said.
He added that every time ERB adjusted the pump price of petroleum products downwards, the OMCs took huge losses.
Asked whether the recent adjustment would have an impact on their business, he said it does because products are usually procured in advance in order to be able deliver them within the reference month.
He pointed out that if the government goes ahead to reflect changes based on current happenings in the market, the OMCs would experience huge losses.
“For instance, to be able to deliver/sell products in January 2023, we must close the supply deal in November 2022.
Now, we closed the deal in November 2022 in order to sell the product in January and the government has reduced the price just because there was a dip in oil price in December,” he said.
He advised that the government should recognise and acknowledge a reference pricing basis for the monthly fixing of price.
To make matters worse, he said the Zambian Kwacha had depreciated by more than K1 in the last one month.
On December 31, 2022, the ERB lowered the pump price for petroleum products, with petrol pegged at K24.49 per litre, K26.44 for diesel and K19.98 per litre for Kerosene.
Further, the ERB has posted downwards the airfield price of Jet A-1 at Kenneth Kaunda International Airport by K22.63 per litre and K20.45 per litre, while maintaining the price of diesel at K27.38 per litre.
According to ERB, the fall in oil prices at the end of November was owing to central banks aggressively raising interest rates to courter the surging inflation, triggering fears of global economic slowdown.
It indicated that China’s Covid-19 restrictions also diminished demand for finished petroleum products.
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