ERB monthly fuel pricing model accused of favouring multinational over local firms

The Oil Marketing Companies Association of Zambia […]

The Oil Marketing Companies Association of Zambia President Dr. Kafula Mubanga has expressed serious concerns over the monthly price review model adopted by the Energy Regulation Board, noting that it favors multinational OMCs as opposed to local ones.

Speaking in an interview with Zambian Business Times, ZBT Dr. Mubanga noted that Zambia consumes about 1 million liters of diesel on a monthly basis and half a million liters of petrol, and the majority of it is supplied by multinational OMCs, of which the government needs to create policy to ensure that local OMCs benefit.

 “Looking at the total volume cycle, the government has never come back at any given point to give statutory instruments that direct the multinational to work with local content. The ones with the huge muscles in the market currently are foreign OMCs and are the ones driving the market, but that is at the expense of the indigenous OMCs,” said Mubanga.

 He added that Zambia has poor policy, as given to the Multinational National Oil Marketing Company to control the oil market and make more profit at the expense of local OMCs.

 “The Multinational Oil Marketing Company has taken advantage of poor policy in terms of ensuring that the market is balanced and is able to optimize and make profit, which is making Multinational OMCs make a lot more profit,” said Mulanga.

He further mentioned that the government should realize that the monthly fuel prices review model is not fit for the Zambian petroleum market.

“The monthly fuel price model is not fit for the Zambian local market and is an agenda driven by the multinationals to monopolize and streamline participation by the multinationals to sideline local participation,” said He added that the government should revert back to utilizing INDENI—the quarterly review model—to help both the market and industry players.

“The ideal of a monthly review was initially not established by the current government; it was floated before previous governments, but it should be revised because it doesn’t favor the Zambian petroleum market from a technical side as opposed to a business side, and that is why Zambia has gotten to where it is now,” said Dr. Mubanga

 He mentioned that with the current monthly fuel price model, Zambia will have the most expensive oil product.

“If you remove the waivers that the government intends to do, you will notice that it doesn’t add up and is actually very extortionate, and Zambia will become one of the most expensive countries when it comes to petroleum products because of the pricing model the Energy Regulation Board has adopted, which is very expensive,” said Dr. Mubanga.

 He noted that Zambians are currently paying an extra tax to cushion the price changes on the international market, and increasing the pump price poses serious danger to the economy because customers are already paying more.

Article by Justine Phiri