Maravi

ERB reduces fuel prices

ERB reduces fuel prices
Written by Joan Chirwa
Tuesday, December 23, 2008 12:30:12 PM

THE Energy Regulation Board yesterday announced a near 25 per cent reduction in pump prices for petroleum products owing to declining costs of crude oil on the international market.

In a press release, ERB acting executive director Butler Sitali indicated that the delay to implement lower prices of fuel in line with international trends was necessitated by the backlog of unsold products at Ndola Fuel Terminal from the last cargo which was bought at a much higher price.

With the announced price reduction, a litre of petrol in Lusaka would, starting last midnight, be K5,818 from the previous K7,691 , representing a 24.35 per cent price cut, while diesel would cost K5,478, down from K7,264. Kerosene would now be sold at K3,834 per litre from the previous K5,000.

Petrol prices for areas outside Lusaka are now in the range of K5,721 for Ndola and around K6,500 for far-flung areas such as Mongu, Kasama, Mansa and Chipata.

“The above prices are the maximum prices at which fuel should be sold. Members of the public should report sales of higher prices than those indicated after 48 hours from midnight tonight (yesterday). Receipts for such transactions should be obtained and incidents reported to the ERB,” Sitali stated. “The reduction has been made possible by the reduced cost of the latest 90,000 metric tonnes cargo which was purchased at US$53 million and arrived end of November, compared to the October cargo which was bought at US $81 million.

“Implementation of price reduction in Zambia has however been relatively gradual due to the pricing mechanism, the Cost Plus. This pricing mechanism adjusts prices on a cargo basis and does not respond immediately to price changes on the international market, unlike the IPP [Import Parity Pricing] methodology which was being used in the past.

“However with this price review, Zambia will benefit from reductions on the international market, despite the depreciation of the kwacha at 24 per cent against the US dollar.”

High fuel prices in Zambia constitute the largest part of operational costs for most businesses in the country. The business community has over the years advised that the cost of fuel needs to be lowered to enhance production at the local level.

Labels: ERB, FUEL, INFLATION

posted by MrK @ 12:30 PM