Justify fuel price hike

Why should Zambians pay more for fuel than all the neighboring countries?
This is the question that Government must answer. The truth is that even before this increase was effected Zambians were already paying more. This new increase has only added to the price and this at a time when world fuel prices have dropped.
The issue of subsidy must also be explained considering that our neighbours with cheap oil do not have to subsidize it.
What are we doing that is making our fuel expensive to the point of being subsidized?
The Government suggests that the removal of subsidy will release funds for development purposes this sounds like the eurobond.
The Government has stated that the estimated K1.1 trillion subsidy would go a long way in financing the construction of more than 100 new rural primary schools or over 120 new rural health centers to help the majority marginalized Zambians.
In addition the Government  has stated that the  subsidy will make funds available for the upgrading of Indeni Oil Refinery to enable it process pure crude oil which is cheaper to import and will result in cheaper imports by about US$10 million while providing other by – products to be used in plastic, road and fertilizer industries.
The Minister of Sport Chishimba Kambwili was even more graphic when he explained that the subsidy was withdrawn because very few people, namely car owners benefitted from it. For this reason, he said, the subsidy was withdrawn in order that the money went into a pool from which all Zambians would benefit.
The Minister forgets that fuel is the engine of the economy,  where even the most modest of adjustments cascades through the economy affecting all Zambians through high bus fares, higher commodity prices as a result of higher transportation costs and so on.
It will be recalled that one of the first steps that the Patriotic Front Government took soon after assuming power was to reduce the price of fuel because it was too high.
Announcing the price reduction of about 6.5% energy minister Chris Yaluma said petroleum pump prices in Zambia had been too high. Petrol price was reduced by 5.7 per cent, diesel by 4.9 per cent and kerosene by 8.6 per cent, the minister said.
The new prices came into effect from midnight on Friday October 7, 2011,”
During the same briefing the Minister announced the dissolution of the Energy Regulation Board (ERB) and commenced  investigations in oil procurement over corruption allegations, which he blamed for high fuel prices.
Subsequently the current Minister of Justice Wynter Kabimba was appointed to chair a commission ostensibly investigating the corruption that was responsible for the high price. He did not fail the task as he dutifully announced that Zambia had lost more than K2.3trillion due to corrupt oil procurement.
Soon after, he formed his own oil company Midland Oil.
Barely 18months after the Government has completely u-turned on the subject, thereby leaving many questions un-answered.
The one very important one being:
Why are Zambians paying more for fuel than all the neighboring countries?
Where in the scheme of things does corruption influence the prices.

Categorized | Editorial

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