THE Energy Regulation Board has increased the prices of fuel from K9.91 to K10.63 for petrol and K9.20 to K10.01 per litre for diesel, effective midnight tonight.
An upward movement in fuel pump prices always trigger corresponding adjustments in the prices of goods and services.
Board chairperson George Chabwera in a statement this evening stated that the upward adjustment had been triggered by the depreciation of the kwacha.
“The Energy Regulation Board has increased the pump price of petroleum products by 7.22 per cent for petrol, 8.75 per cent for diesel and 9.54 per cent for kerosene (K6.83 to K7.48), while wholesale prices have been adjusted by 11.15 per cent with effect from midnight 17th April 2014,” Dr Chabwera stated.
“The exchange rate of the kwacha against the US dollar depreciated significantly from K5.40 at the last price review in April 2013 to the current level of K6.20 to the US dollar by 14.8 per cent cumulatively. This cumulative depreciation of the kwacha against the US dollar has been the major trigger for this fuel price increase.”
Dr Chabwera stated that pump were determined based on the cost of each cargo and the exchange rate of the kwacha to the US dollar.
He explained the ERB uses the cost plus pricing model which operates on the principle that the final price of petroleum products should cover all costs in the supply chain.
Dr Chabwera stated that an analysis of the March 2014 feedstock shipment done by the ERB revealed that if prices did not change, a significant loss would be incurred on the shipment of feedstock for the refinery.
“To avert this loss as well as provide for adequate financial resources to sustain the continued purchase and supply of petroleum products, it became necessary to review prices at the pump,” stated Dr Chabwera.
“In order to cover the cost of the cargo, the wholesale prices of petrol, diesel and kerosene, Jet A-1, heavy fuel and liquefied petroleum gas at the Ndola Fuel Terminal would have to be increased by 11.5 per cent.”
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