Fuel price hike a setback
Published On April 28, 2014 » 3056 Views» By Moses Kabaila Jr: Online Editor » Columns
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Beyond the news - KundaZAMBIANS have again been subjected to an upward adjustment in the retail pump price for petroleum products namely; petrol, diesel and kerosene.
The Energy Regulation Board (ERB) announced recently that the retail pump price for petrol had been increased by 7.2 per cent, from K9.91 per litre to K10.63 per litre.
Diesel had increased by 8.75 per cent, from K9.20 per litre to K10.01 per litre, while the cost of kerosene has now gone up from K6.83 to K7.48 per litre.
The changes to the price of petroleum products have been implemented at a time when ordinary consumers are faced with numerous challenges to meet the ever increasing cost of living.
Since December 2013, the price of breakfast mealie-meal has been on the increase with the commodity fetching almost K90 per 25 kilogramme bag in some parts of the country.
Other than that, the Kwacha has of late not been performing well against other convertible currencies and this has pushed the cost of essential commodities up.
Products like sugar, bread and cooking oil are nearly out of reach for consumers in the low class who cannot afford three basic meals per day.
Alcohol prices in Zambia are the highest in the Southern Africa region which shows that something needs to be done to cushion high commodity prices.
People have been forced to bear a lot of costs on a shoe-string budget and thus increasing the price of petroleum could not have come at a wrong time than now.
Always, increases to the price of petroleum have an all-round adverse effect on the economy because activity across many spheres revolves around fuel consumption.
Operations in sectors such as transport, manufacturing, mining and agriculture are likely to be affected by the adjustment in fuel prices.
Government needs to find short-term means of cushioning this consumer burden more so that the impact of the fuel price increase has a lot of direct and indirect effects.
Bus and taxi fares on the local and inter-city routes will be adjusted upwards because service providers will be spending more to ferry customers from one point to another.
In some areas, taxi owners made adjustments to fares even before players in the transport industry could reach a consensus for the same.
Equally, companies involved in mining and manufacturing will claim that they too are incurring huge production costs, a scenario that could lead to reductions in the workforce.
People will recall that Konkola Copper Mines at one time had intentions of retrenching 2,000 people because the company was grappling with financial challenges.
This was at around the same time that Government scrapped off the subsidy of fuel, a move that also triggered prices upward.
The month of May is usually harvest period for farmers who will need to take their produce from the farms to the market.
Farmers will incur high transportation costs for their commodities and they too will have no option but to increase the price of their prime crop, maize.
Imagine if millers were buying maize at a higher cost than now, where will mealie meal prices end up?
In the long-run, fuel pump prices could decline on account of expected appreciation of the kwacha against major convertible currencies and cooling crude oil prices internationally.
But until then, measures should be taken to ensure that the price of petroleum remains within optimum range for the ordinary consumer to afford.
Hopefully the companies that have been engaged in oil and gas explorations will find something that can propel the country to start producing its own fuel.
This will be a remedy for the country incurring colossal costs when importing petroleum.
Send your comments/contributions to jameskunda91@gmail.com or call and text to 0964317110/0973182006.

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