Energy policy

That the price of fuel in Zambia is comparatively higher than all the neighboring    countries is not a function of global oil trends, it is a function of Government policy.

That is why it is totally misleading for the Minister of Mines, Energy and Water Development Mr. Christopher Yaluma to suggest that pump prices will come down as soon as Government realizes a supply contract from Saudi Arabia or some other oil producing countries.

The reality is that pump prices in Zambia are the function of Government policy. Apart from being a regulatory authority, the Government is also in the business of procuring oil.

It has more recently procured oil from Trafigura as twice the world prices. Ultimately the people of Zambia have been made to pay for this purchase.

Elsewhere in the World and South Africa in particular, oil prices are the function of the market. Consumers benefit or pay more depending on the ruling market prices. As a result prices are almost at parity with global prices.

Interestingly, these prices have always been lower than our pump prices and equally interesting is the fact that prices have sometimes gone down depending on the ruling prices on the international market.

Our prices are high because of the deliberate policy of exclusion which has demanded that oil companies importing independently must pay a higher duty, while the crude or finished products imported by Government do not fetch similar dues. As a result of this discriminatory practice and because of the high levies imposed, the pump price is “lower” than it would be if consumers were exposed to the full price of oil imported by private companies. For this reason they do not even bother to import unless when asked by the Government and stringent conditions waived.

It is for this reason that Government effort at securing oil from cheaper sources is in many respects an exercise in futility.

Why do we say so.

The Government may indeed secure cheaper supplies, but these will be shipped to Zambia by private entrepreneurs as the Government does not have the requisite assets for the task. Once again consumers will be subjected to the extra-market manipulation which has always ensured unfair competition and in some cases outright corruption.

The final answer lies in eliminating the Government from active procurement and shipment. Let the market compete equally and let the appropriate regulatory authority undertake its responsibility without the encumbrance of being in the market through Government.

We have said it before and will repeat that Zambia needs a very comprehensive energy policy that should spell out the role and function of Government in relation to oil procurement, distribution and marketing.

In particular the Government should also review the duties, levies and taxes that it imposes on oil because of the role that energy plays in the economy.

If anything the Government must demystify the role it plays in inflating the price of oil by unbundling the so called subsidy which in reality was nothing more than paying for overpriced oil which should not have been bought.

Therefore, any effort to lower pump prices must start with the Government which should open and liberalize acquisition to ensure that the most cost effective procurers will win the day. It should not be for the Mandarins to determine prices.

Our appeal is for the Minister Yaluma to demystify oil procurement liberalize and allow the market to operate within acceptable limits as applies in other countries, where Government does not exercise undue influence on the market. 

Categorized | Editorial

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