LUSAKA – The price of petrol has jumped by K6.17 per litre, taking it from K25.29 to K31.46, in the latest Energy Regulation Board (ERB) adjustment that took effect at midnight on September 30. Diesel has risen even more in absolute terms, going up by K6.41 from K26.86 to K33.27 per litre. Kerosene has increased […]

LUSAKA – The price of petrol has jumped by K6.17 per litre, taking it from K25.29 to K31.46, in the latest Energy Regulation Board (ERB) adjustment that took effect at midnight on September 30.

Diesel has risen even more in absolute terms, going up by K6.41 from K26.86 to K33.27 per litre.

Kerosene has increased from K27.02 to K29.76, while Jet A-1 at Kenneth Kaunda International Airport has moved from K28.71 to K31.85 per litre.

For motorists and businesses, the immediate question is how much more the latest adjustment will add to transport and operating costs.

But there is a second question that goes beyond Wednesday night’s price increase: can Zambia eventually move away from the monthly fuel price reviews that have become a regular feature of life at the pump?

That question has now been raised by President Hakainde Hichilema himself during his working visit to the United Arab Emirates.

The October jump

The K6.17 increase means petrol is now about 24 percent more expensive than it was in September.

For diesel, the K6.41 increase represents about a 24 percent jump from the previous K26.86 price.

The ERB attributed the October adjustment to several factors, including higher international petroleum prices, movements in the exchange rate and the reinstatement of excise duty following the expiry of the Government’s temporary tax-relief measures.

During the review period, the average international price of petrol increased from US$104.94 to US$121.58 per barrel, while diesel moved from US$150.92 to US$160.88.

At the same time, the Kwacha depreciated from K19.28 to K19.76 against the US dollar.

These movements matter because Zambia’s fuel pricing system is heavily influenced by the cost of petroleum on international markets and the exchange rate used to bring that product into the country.

The ERB says the Government’s price-smoothing measures, including the suspension of excise duty and zero-rating of VAT between April and September, helped moderate the impact of international price movements on consumers.

With the tax-relief period ending, excise duty has now been reinstated. VAT is scheduled to return on December 1, 2026.

The bigger picture: where fuel prices have been this year

The latest increase becomes more significant when placed against the movement of fuel prices since the beginning of the year.

In March, petrol was K26.61 per litre.

The April review pushed it up to K27.15.

The situation was much more dramatic for diesel. It moved from K23.25 in March to K29.78 in April — an increase of K6.53 in one monthly review.

Government responded in April by suspending excise duty and zero-rating VAT on petrol and diesel as part of measures intended to cushion consumers from the sharp international increase in petroleum prices.

The following months brought some relief.

Petrol remained at K27.15 in June before falling to K26.15 in July and then K25.29 in August.

Diesel fell from K32.11 in June to K28.11 in July and K26.86 in August.

September then passed without another increase, leaving petrol at K25.29 and diesel at K26.86.

That period of lower prices has now ended.

The October increase means petrol is K4.31 higher than it was in March, while diesel is K10.02 higher than the March price.

In percentage terms, diesel has risen by more than 43 percent over that period, while petrol is about 18 percent higher.

The journey has not been a straight upward line. There were reductions in June, July and August. But the latest adjustment has pushed prices well above where they stood at the start of the year, particularly for diesel.

Why the price keeps changing every month

Zambia has used a monthly review mechanism to adjust pump prices in response to movements in international petroleum prices and the Kwacha-dollar exchange rate.

The ERB says Zambia’s petroleum prices are determined using a Cost-Plus Pricing Model, which accounts for the costs involved in procuring petroleum products and bringing them to the pump.

This means that when international prices rise or the Kwacha weakens, pressure builds for domestic pump prices to rise.

When international prices fall sufficiently, consumers can also see reductions.

That is precisely what happened between May and August.

But the monthly system also means that businesses, transport operators and households can face a different fuel price from one month to the next.

It is this unpredictability that President Hichilema says his Government now wants to address.

What HH discussed in the UAE

During his UAE working visit, President Hichilema met Ahmed Bin Thalith, Chief Executive Officer of ADNOC Global Trading, the trading arm of Abu Dhabi National Oil Company.

According to the President’s office, the discussions focused on ways of stabilising Zambia’s fuel prices and moving away from the current monthly price-adjustment cycle.

Hichilema said frequent fuel price changes create uncertainty for businesses and households, making planning more difficult and complicating economic management.

He said Zambia was interested in working with partners such as ADNOC on long-term supply arrangements that could provide greater stability.

This is potentially significant because it shifts the discussion from simply asking what the next month’s pump price will be to asking whether Zambia can change the underlying way it procures and prices fuel.

The President has not announced that monthly reviews have already been abolished.

Rather, the official position is that Government is exploring long-term supply arrangements and a move away from the current monthly system.

Why ADNOC matters

ADNOC is the Abu Dhabi National Oil Company and one of the world’s major energy companies.

The meeting therefore brings a major international energy player into Zambia’s discussion about fuel-price stability.

The logic behind the Government’s approach is that a more structured, longer-term supply arrangement could potentially reduce the frequency with which changes in international markets are passed directly through to the Zambian pump.

But such an arrangement would not necessarily mean that fuel prices could never rise.

International oil prices would still matter.

Exchange-rate movements would still matter.

Taxes would still matter.

Transport, storage, financing and other costs would still form part of the final price.

What could change is how frequently and how sharply those factors are translated into pump-price adjustments.

That distinction will be important if the Government eventually moves from discussions with ADNOC to a concrete supply agreement.

The tax question is also important

The latest increase is not solely an international oil-price story.

The expiry of the temporary tax measures has also affected the price.

Government suspended excise duty and zero-rated VAT on petroleum products earlier in the year as international prices surged.

The ERB said those interventions helped moderate the impact on consumers, although they also meant Government did not collect some of the taxes it would ordinarily have received.

Excise duty has now returned.

VAT is scheduled to return in December.

That means the December fuel review will be another important point to watch because the tax component of the pump price will change again.

What this means for motorists and businesses

The immediate effect of the October increase is straightforward.

A motorist buying 50 litres of petrol will now pay K1,573, compared with K1,264.50 at the September price.

That is an additional K308.50 for the same 50 litres.

For diesel, 50 litres now costs K1,663.50, compared with K1,343 at the previous price — an increase of K320.50.

For commercial transporters, farmers, manufacturers and businesses operating vehicle fleets, the effect can be considerably larger because fuel is an operating cost rather than simply a household expense.

Those costs can eventually feed into transport fares, delivery charges and the prices of goods and services, although the extent and timing of such pass-through will vary from one sector to another.

The question now is whether the system can change

For years, the monthly ERB announcement has become part of Zambia’s economic calendar.

At the end of every month, motorists wait to find out whether fuel will become more expensive, cheaper or remain unchanged.

This month’s announcement has again demonstrated the vulnerability of consumers to movements in international markets and the exchange rate.

But the UAE discussions introduce a different possibility.

If Zambia can secure reliable long-term petroleum supply arrangements, the Government believes it may be possible to make fuel pricing more predictable and move away from the current monthly adjustment cycle.

That proposal is still at the discussion stage.

For now, motorists have to deal with the K31.46 petrol price and K33.27 diesel price.

The longer-term test will be whether the discussions in Abu Dhabi can translate into a different fuel procurement and pricing model — one that provides greater stability without simply shifting the cost from the pump to the Treasury.

That is the part of the fuel story that could matter far beyond October.

Zambian Eye will continue to follow the Government’s discussions with ADNOC and the implications for Zambia’s fuel pricing system.