The Energy Regulation Board (ERB) has effective midnight tonight Friday, 30th January announced a Low Sulphur Gasoil price reduction.
ERB Board Chairman Pastor Geoff Mwape in a statement issued to QFM News that the price for Low Sulphur Gasoil has been reduced by 83 Ngwee per litre from K10.72 to K9.89 representing a percentage change of 7.74%.
Pastor Mwape adds that the wholesale price has been reduced by K11.53 from K7,413.86 to K7,402.33 representing a percentage change of 0.16%.
Pastor Mwape explains that previously, this function of reducing the price for Low Sulphur Gasoil was performed by the Ministry of Mines, Energy and Water Development, owing to the fact that demand for Low Sulphur Gasoil (LSG) was low and was exclusively imported for use by specialised industrial consumers who require cleaner and environmentally friendly fuels.
Pastor Mwape says going forward; the ERB will set the price for LSG using principles of the Cost-plus Model.
He explains that the pricing model operates on the principle that the final price of petroleum products should cover all costs incurred in the supply chain.
Pastor Mwape says therefore, the cost for Low Sulphur Gasoil (LSG) will be determined based on the cost of each consignment of the LSG imported.
He states that the cost of each consignment is mainly affected by global oil prices and the exchange rate of the Kwacha to the United States Dollar.
The ERB Chairman says the current consignment of LSG was purchased at a time when the international oil prices were still on a downward trend, and that consistent with the recent price adjustments for other petroleum products, the benefit of the continued drop in international oil prices is now being extended to the wholesale and pump price for LSG.