Reducing fuel price unrealistic, says EFZ
ONLY countries that will procure fuel at the current low price are likely to pass on the benefits to consumers and calls for an immediate reduction fuel prices in Zambia may not be realistic.
Energy Forum Zambia (EFZ) chairperson Johnstone Chikwanda said yesterday that this was so in Zambia especially that pump prices were reviewed every 60 days..
Mr Chikwanda said while Zambians were anticipating a reduction in the pump price following a reduction in global prices of fuel, it was only possible if the country bought at least one ship load at the current price and hoped that the Kwacha remained stable.
“Regarding calls for pump price reductions, only countries that will procure at this low price are likely to pass the benefits to consumers depending on the state of the exchange rate. If the window for the low price closes and you have not yet procured anything, it is hard to reduce pump prices.
“In Zambia, pump prices are reviewed every 60 days so we can only hope that there will be a purchase of at least one ship load while prices remain low and hope for the Kwacha to remain stable. Should conditions remain favourable, it is likely that consumers could benefit,” Mr. Chikwanda said.
He said the sudden fall of oil prices on the international market might not be sustainable as it was triggered by short-term rapprochement considerations some of which might have to do with circumstances in which Saudi Arabia, one of the biggest oil producers, might have found itself and that those complex circumstances were transient and politically-motivated.
“Yet, it must be understood that at times, traders of crude oil and refined fuel agree a fixed hedged price with producers and off takers so that prices remain fixed for a prolonged period. These market instruments contribute to keeping prices stable for prolonged periods within certain limits. This is usually akin with long term supply contracts,” he said.