Overhaul fuel supply chain
Published On May 16, 2015 » 382 Views» By Davies M.M Chanda » Features
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Beyond the news - KundaEXACTLY one year ago; this column featured an article I wrote on the increase in fuel prices and how the move would have a negative effect on the economy.
At that time, the Energy Regulation Board (ERB) had increased pump prices for petrol from K9.91 per litre to K10.63 per litre and diesel from K9.20 per litre to K10.01 per litre.
We do not pay much attention to the cost structures for kerosene as the commodity is much under-utilised when compared to petrol and diesel.
Nonetheless, ERB also announced that the price of kerosene had gone up from K6.83 per litre to K7.48 per litre.
Last week, ERB revised fuel prices upwards albeit after a rejection in January.
Petrol is now costing K8.74 per litre from K7.60 per litre, diesel K7.59 per litre from K6.59 per litre and Kerosene K5.40 per litre from K4.69 per litre.
I have been prompted to write about the fuel increment again a year after my last article on the same because of the evident problems that need to be sorted out in the local fuel industry.
Zambia has been importing fuel in crude form and as a finished product from time immemorial hence every time there is an adjustment to petroleum prices; two factors come to the fold.
It is either the depreciation of appreciation of the Kwacha against the United States Dollar to the fall or rise in oil prices on the international market.
The delay in addressing the aspect of importing fuel has left the country in a predicament and unless this is dealt with efficiently, we have a lasting problem without a solution.
The current fuel supply chain must be revisited and overhauled as there are a lot of inconsistencies causing the Government to pay huge sums of money when importing the commodity.
Ultimately, it is the tax payer feeling the pinch for both the wholesale and retail costs of petroleum.
Some companies have been engaged in exploring for oil and gas for nearly a year now but we are yet to hear of the results.
If indeed the country has traces of oil, authorities have to move fast and rope in people to invest in oil wells so that the country can start producing its own fuel.
For the last four decades, Zambia has relied on a sole petroleum refinery at Indeni in Ndola.
That refinery is outdated and in need of modern equipment to refine all forms of petroleum and this may also allow an increase in sources from which to import fuel.
Neighbouring Angola is one source of fuel that has been overlooked due to inefficiencies of Indeni leaving the Middle East as the only source of crude oil.
Changes to the price of petroleum products have been implemented at a time when ordinary consumers are faced with challenges to meet the cost of living.
Increases to the price of petroleum have an all-round adverse effect on the economy because industry revolves around fuel consumption.
Companies involved in heavy duty mining and manufacturing will claim that they too are incurring huge production costs, a scenario that could lead to reductions in the workforce.
Bus and taxi fares on the local and inter-city routes will also be adjusted upwards because service providers will be spending more to ferry customers from one point to another.
Initiatives to propel the appreciation of the Kwacha will of course contribute to a stable fuel price but are we assured of sustainable measures in this regard?
Comments and contributions; jameskunda91@gmail.com or 0973182006

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