The Inter-Africa Governance Network (AFRINET) welcomes and commends President HAKAINDE HICHILEMA and his administration for the decision made as a directive to the newly appointment Permanent Secretary in the Ministry of Energy Mr. Peter Mumba to engage with stakeholders in bringing to an end the monthly review of the Petroleum Pump Price and facilitate a quarterly or more review of the pump price of Petroleum on the local market.
For the record, AFRINET has on several occasions engaged government on the need to revert
to a minimum quarterly review of the petroleum pump price, notably through repeated separate correspondence dated 5th September, 2022 and 3rd September, 2023, addressed to the Ministers of Finance and Energy, the same copied to President Hakainde Hichilema and his relevant advisors.
As AFRINET, a policy dialogue platform, we have been of the firm view that the monthly review of the Petroleum Pump Price and its resultant Petroleum Pump Price volatility due to a myriad of External
Factors largely driven by Geo-Politics and conflict on the Global stage has been responsible for the generation of a good share of the high Petroleum Pump Price, general uncertainty in the economy in terms of actual and forecast planning on the part of the
entrepreneurs and policy implementers, artificial pricing in the process of hedging against the possible erosion of capital, stead
rise in inflation, instability in the capital cost and local currency volatility on the local financial market among other frailties experienced in the recent past.
As an organization, we have been of the informed economic opinion that a fair share of the general high price of goods and services determinant of the cost of living are not reflective of the positive fundamentals achieved in the economy.
Therefore, as AFRINET we envisage that once the monthly review of the Petroleum Pump is disengaged for a minimum quarterly review or more, in the second quarter of 2024, the prices of goods and services should stabilize and by the close of 2024, the cost of living should notably get on a downwards trajectory should all fundamentals remain relatively constant (ceteris paribus).
Lastly and more importantly, AFRINET is of a humble contribution to the whole conversation of switching to the quarterly or more review of the Petroleum Pump by the following suggestions as we maintain our clarion position against Financial Subsidy as it is a distortion in the economy:
1) Interrogate the propriety for the introduction of a Petroleum Pump Price Stabilization Fund, which is NOT a subsidy to be injected into the Petroleum Pump Price and regenerated or factored into the pump in the subsequent quarterly price review.
2) Interrogate the propriety for the introduction of a Petroleum Wholesale Price Locking
Mechanism in which government and the oil wholesalers (country or firm) agree on a slightly higher price arrived at from the average price movements, at which the price is locked. Implying that the locked price is not affected by either the upwards or downwards price
adjustment. Although the wholesale Petroleum price will be slightly higher than the obtaining price, however the economy would have achieved a stable Petroleum Pump Price, Market Certainty and Confidence, stable prices of goods and services by eliminating Price Artificiality to a barest minimum.
3) interrogate the propriety for a quarterly advance payment in facilitating bulky buying at a price negotiated slightly lower than the obtaining wholesale price on the international market as a benefit for the advance payment whose consignment ought to be delivered as a monthly supply unit considering that Zambia at the moment does not have the reservoir infrastructural capacity to store Petroleum of a quarterly unit or more.
4) Interrogate the propriety for a formula or option that would be a combination or hybrid of the three options as suggested above.
AFRINET would like to urge ALL stakeholders in the economy to suggest to government all
possible options for the implementation of a quarterly or more review of the Petroleum
Pump Price without the introduction of a Financial Subsidy in order to increase the sense of predictability and stability in the economy.
MAURICE MALAMBO
EXECUTIVE DIRECTOR
CC. The Republican President – Mr. HAKAINDE HICHILEMA, Presidential Economic Advisor,
Presidential Political Advisor, Minister of Finance, Permanent Secretary – Energy, Economics
Association of Zambia, Zambia Chamber of Commerce and Civil Society in Zambia.