Maravi

Prof Saasa urges govt to increase fuel reserves

Prof Saasa urges govt to increase fuel reserves
By Chibaula Silwamba
Monday April 21, 2008 [04:00]

THE Zambian government should keep enough fuel in strategic reserves in view of the increasing prices on the world market, international economic relations expert Professor Oliver Saasa has advised. Commenting on the global oil prices that have hit a record high of US$ 116 (about K407,000) per barrel this week, Prof Saasa said there was need for strategic reserves of fuel that could be sustained for longer periods until prices stabilised.

"My worry is that the more the price of oil on the international market escalates the less will be the ability of the government to continue the same level of subsidy in which case it will mean that the consumer will continuously have to pay more," he said.

Prof Saasa said the increase of oil prices was due to the weakening US dollar and oil producing countries' reduction in supply of the commodity.

"So you are seeing the combination of factors that impact ultimately and would perhaps remain a little bit longer than we fear. One prays that actually oil prices reach some stabilisation.

This is a factor that is outside our control to some extent," he said. "You are aware that oil producing countries to some extent they have some element of a cartel that allows them to determine how much per barrel they can produce but of course the market forces play a role.

It's all about supply and demand so we can only pray, as a country that does not produce oil, that the price will stabilise early enough sooner than later."
He said, locally, the Energy Regulation Board's recent increase of fuel prices by seven per cent was high.

"Now a litre is almost two dollars and that is one of the highest prices in the world," he said. "However, you are aware that at the moment the oil is subsidised by the government. If it was liberalised it would be worse than what it is now."
He said sometimes fuel prices were determined by availability of the commodity.

"You remember we had problems with Indeni Oil Refinery when scarcity was more a function not so much inability to pay for the commodity but because we didn't prepare ourselves enough to make sure that actually our pumps are not dry," said Prof Saasa.

Labels: FUEL, OLIVER SAASA

posted by MrK @ 4:30 AM