Fueling the Fuel Fiasco

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Author Godfrey Chitalu

WHETHER we like it or not, we can’t court International Monetary Fund and survive fuel increments. Anytime soon, the price of fuel will go the cost-reflective way. Without being prophetic: some explanations will be given why we should go to Hell for the sake of going to Heaven later.

In simplicity, cost-reflective pricing is based on the premise that the most efficient allocation of resources occurs when consumers pay the full cost of the goods that they consume. Our subsidized fuel is on the lower end of the spectrum in terms of cost.

Despite this seemingly untenable position in the eyes of donors, there is a need for the New Dawn government to move swiftly and close leakages in the petroleum value chain.

A clique of criminals has long been fueling the fuel fiasco. A little sabotage at Indeni, an oil refinery in the commercial city of Ndola, profits fuel value chain watchers.

With political will, we can maintain low fuel prices and beguile the IMF and their stooges with our efficiency. Energy Regulation Board insists that fuel prices are influenced by the international oil price and the exchange rate of the Kwacha against the Dollar. There however is no link with their pricing mechanism. International oil prices drop and our Kwacha appreciates in vain!

What we need to do is to critically look at the cost of procuring and transporting oil from wherever it comes from. How much do we buy crude oil? What contracts do we have? Is there room to use prevailing market prices in the short term? Unfortunately, the international pricing mechanism is fixed largely because of advance bulk purchases and poor planning. Who transports our oil from the Middle East to the port in Tanzania? Is there a way government can let others do it efficiently and cost reflectively by only providing oversight? Therein lies the fuel fiasco!

What about government taxes? Is there a way the more than one-third tax can be reduced? What about the cartel that transports fuel from Tanzania to Zambia! What is the markup for Oil Marketing Companies that transport finished products? Are we getting a good deal from international transporters? Remember efficient, quick, and low-cost transport could be a game-changer.

Our people now only spend money on four important things; rentals, food, education, and transport. None have any room for discretionary spending, largely because of the price of fuel. Both retailers and wholesalers pass on the fuel expense to the common person. To say the price of fuel has no effect on our suffering is an understatement. 

I won’t talk about the UPND campaign promises to reduce the price of fuel by a minimum of K4 because some people might say why uvichitilamo and ba 2.8 will ask me ati kodi unakondapo party iwe?

The author is a social commentator who writes for pleasure.

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