OIL prices have declined to their lowest ever in so many years-US$48 per barrel. This is almost US$100 lower than the price we paid a few months ago.
The decline has been drastic and beyond all market expectation and yet the impact on our pump prices in Zambia has been absolutely minimal or really non-existent or delusory at worst.
The reason is simple. There is a very serious procurement “fiddle” that must be resolved. It lacks transparency and accountability. The last time an open system of procurement was made we landed with Trafigura which charged us well above the world prices and todate no explanation has been offered, although we know that somebody benefitted.
Whoever benefitted must be brought to account because it is unconscionable for any individual or group of individuals to subject a nation to such callous and mindless abuse for personal benefit.
There is of course no reason to connect that purchase to the current situation but the principle remains the same, namely lack of transparency in procurement.
It would have stood to reason that prices would be adjusted to respond to this movement, but this is not happening. The right noises have been made but little if any adjustments have been made to reflect the reality on the ground.
Part of the problem is the disconnect between the Energy Regulation Board and the actual procurement process which seems vested in the Government and therefore among mandarins who are answerable to political authority.
There is a need to excise the procurement function from Government to a more transparent system where the major oil marketing companies will be involved, rather than the present system where Government procures using one or the other oil marketing company and then wholesale to other OMCs.
There is everything wrong with this system because it makes for the opaque nature of our procurement system which has remained an intractable mystery to all but the initiated few. This situation is totally unacceptable. A national procurement must be open to public scrutiny and challenge.
We must know why we must purchase from Trafigura and not any other company. Everyday tankers roll into Zambia bringing fuel whose cost many of us do not know. The only point of contact is the petrol pump whose price is the function of yet other variables including Government taxes.
Our appeal is for ERB to mount a sensitization campaign to relate world prices to our pump prices. There is of course the lag between purchase and eventual delivery and yet we know that a well planned purchase will take account and hedge against all the various variables.
Zambians want transparency that will justify whatever price the ERB will come up with. We should know why the fuel processed by Indeni in Ndola should be the same as the finished products that are imported into the country by tankers.
In the final analysis, it is important that a relationship is established between global prices and our own pump prices. This is what happens in such countries as South Africa where automatic adjustments are in concert with global prices.
It is true that South Africa has a coastline which mitigates against transport costs but it is also true that the transport costs we suffer can be explained as they are factored into the final equation.
What is not true and certainly wrong is that we should be kept in the dark.