TUMBLING KWACHA PREVENTING FUEL PRICE REDUCTION IN ZAMBIA BUT COULD TRIGGER A HIKE INSTEAD
By Michael Kaluba
The Oil Marketing Companies Association of Zambia-OMCAZ has warned that the continued depreciation of the kwacha against the US dollar will make it difficult for Zambia to reduce fuel prices, despite the cost of crude oil falling on the international market.
According to business insider, yesterday’s brent crude oil spot price was $76.78 per barrel, down 2.74% from the previous trading day and down from $83.19 per barrel one week ago, while the kwacha has continued to fall, reaching K24 to the dollar as of yesterday.
Dr. Kafula Mubanga, president of the association, says the last two monthly fuel reviews, which saw the Energy Regulations Board-ERB maintain prices, were fundamentally meant to see fuel price reductions, but were hampered by the depreciating kwacha.
He has also cautioned that until the kwacha begins to strengthen against the us dollar, it would continue to impede fuel price reductions, as it has in the previous two months, and that there would likely be upward adjustments if crude oil prices rise on the international market.
Dr. Mubanga adds that the current pricing of crude oil internationally, and the exchange rate, have had little to no impact on the profit margins of OMCs despite canceling each other to keep fuel prices stagnant at slightly below K30 per litre.