ERB slashes fuel prices

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The Energy Regulation Board (ERB) has reduced the pump price of petroleum products by K2.29 for petrol; K2.59 for diesel; and K2.08 for kerosene, which translates into 23.13%, 28.22% and 30.76%, respectively. Wholesale prices of petroleum products have been reduced by 35.93%, effective midnight 16th January 2015.

In determining prices, the ERB uses the Cost Plus pricing model, which operates on the principle that the final price of petroleum products should cover all costs incurred in the supply chain. Wholesale and pump prices are determined based on the cost of each feedstock cargo received. The cost of each feedstock cargo is mainly affected by global crude oil prices and the exchange rate of the Kwacha to the United States Dollar.

Since the last price adjustment on 8th December 2014, the exchange rate of the Kwacha against the US Dollar has held stable around K6.50/US$. Over the past three months, the World has seen the largest slump in oil prices since 2008. Oman crude decreased by US$28.58 (32.88%) from US$86.91/bbl in October to US$58.33/bbl in December 2014. The reduction in international oil prices is the trigger of the current fuel price reduction.

Owing to the procurement process for feedstock cargoes, the current feedstock cargo was purchased in December 2014 when the international oil price had fallen significantly. Therefore, the benefit of the continued drop in international oil prices is now being realized in the form of the substantial wholesale prices and pump prices adjustments.

In order to recover the cost of the cargo, the wholesale prices of Petrol, Diesel, Kerosene, Jet A-1, Heavy Fuel Oil and Liquefied Petroleum Gas at the Ndola Fuel Terminal would have to be reduced by 35.93%.

The new prices are effective on midnight Friday 16th January 2015. This is to allow for depletion of current stocks on the market.

It is, however, important to note that, as world prices of oil fall, there are still other fixed costs within the pricing model which remain constant: such as freight; TAZAMA fees and Refinery fees; taxes; downstream margins for Oil Marketing Companies; Dealers and Transporters; and such fees and charges, that need to be fully covered.

Cumulatively, between October 2014 and January 2015, ERB has reduced the prices by K3.03 or 28.50% for petrol; K3.42 or 34.17% for Diesel and 2.79 and 37.30% for Kerosene.

According to the ERB pricing model, if subsequent procurement of feedstock is made while the falling trend in international oil prices continues and the exchange rate appreciates or holds steady, then more reductions will be expected in the near future.

By Order of the Board

Pastor Geoff Mwape

CHAIRMAN

ENERGY REGULATION BOARD

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5 Responses to ERB slashes fuel prices

  1. Remove all the middlemen, then the price of petroleum products will even reduce further

    OTM
    January 15, 2015 at 1:32 pm
    Reply

  2. Hmm, finally, but did you have to wait for HH to give an ultimatum of 7 days to reduce? anyway thanks to HH for his leadership even if he is still from the opposition.

    OBN
    January 15, 2015 at 1:40 pm
    Reply

  3. THIS CLEARLY SHOWS THAT H.H KNOWS WHAT HE TALKS ABOUT. THIS IS A CLEAR DEMONSTRATION THAT WITH HI PLAN, EVEN MEALIE MEAL WILL BE REDUCED, ELCTRICITY TARRIFS CAN BE REDUCED. A RELACTANCE EXHIBITED BY THESE CROOKS IN REDUCING PRICES AS DEMANDED BY KATEKA H.H SIMPLY SHOWS THAT THERE ARE A LOT OF THINGS THAT CAN BE BETTERED. BUT THEY ARE BUSY STEALING FROM THE CITIZENS.CAN PEOPLE VOTE OBJECTIVELY BY VOTING HH FOR A BETTER ZAMBIA.

    Sheep sheep come Home
    January 15, 2015 at 2:19 pm
    Reply

  4. Surely should the PF government wait for HH to give them an ultimatum of 7 days to reduce fuel? This behaviour by PF is worrying because they had all the time and chance to do what HH is showing them but they never did instead they have to wait for campaigns. These chaps cannot be trusted because they will change everything once they bounce back to power. You cannot trust them at all as they do not mean well to the development of Zambia. These chaps are just after amassing and plunder national resources. PF had no roadmap for the constitution but as usual they copied UPND’s proposal and claimed it was theirs. Imagine Garry Nkombo Mazabuka MP sometime last year he brought a motion in Parliament to urge the PF to show the country the roadmap for the constitution but the motion was shot down by PF and they said they had no roadmap yet as this was going to be looked at later in 2016 or 2017, but after HH last week released the roadmap prepared by UPND lawyers the PF couldnt believe it instead they stole the ideas imediately and claimed these were their ideas. Please Zambians do not trust PF any more and do not vote for Lungu but vote for HH. HH has shown leadership abilities and qualities that Zambia needs.

    Twenty Fifteen
    January 15, 2015 at 2:21 pm
    Reply

  5. Whether all Zambians vote Lungu but for me am voting for H H beleiving her can bring really economic developments for all Zambians

    Pastor
    January 15, 2015 at 3:59 pm
    Reply

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