No Fuel Price Cut Despite Fall In International Oil Prices

The Energy Regulation Board (ERB) has stated that there will be no cut in fuel prices for Zambia despite the fact that oil prices are falling on the international market.

The reason behind the decision is the depreciation of the kwacha, which has performed badly in recent months and now stands at more than K18 to the dollar.

With brent crude oil prices on the international market now at a five-year low of US$20.37 per barrel and down 50% on prices this time last year many countries are enjoying price cuts.

Explaining the decision ERB Public Relations Manager Kwali Mfuni stated,

“The ERB has determined that the current gains from the sustained reduction in international oil prices have been negated by the depreciation of the kwacha during the same period, resulting in there being no price changes made since the last review in December, 2019.

Since the last adjustment on December 26, 2019, international oil prices have dropped from around US $69 to below US $30 per barrel, while the exchange rate of the kwacha against the US dollar has risen from K14.40 to about K18.66.

The ERB has particularly been monitoring movements in international oil prices vis-a-vis performance of the kwacha against the US dollar because the two are the major factors that directly impact local fuel prices.”

“As prices are reviewed for every cargo, on average every sixty days, the March, 2020, price preview that was conducted on a cargo procured in January, 2020, when the international oil prices had not yet started to experience a downward trend, and the kwacha had started to depreciate steeply, did yield minor price variations. However, due to the projected extreme volatility in the two fundamentals at the time and also considering that the changes would have been below the 2.5 per cent trigger band for price adjustment, it was prudent to maintain the prices,” she continued.