15% Fuel Price Hike “too significant” – Consumers might suffer

Following the recent 15% upward price adjustment of fuel by the Energy Regulation Board (ERB), Consumer Unity and Trust Society (CUTS) International wishes to state its position on the matter as it is an issue that affects our constituency, consumers.

To start with, the increment in percentage is unrealistic and will have impact hard on consumers as it will make it more expensive for them to access a number of goods and services.

As a Civil Society Organisation involved in pro-poor policies, CUTS International is on record as having been calling on ERB and other regulatory bodies to conduct consultative processes before making decisions that affect consumers.

We believe that before issues such as fuel price increments are embarked on, a more inclusive and participatory in the hiking decisions making process would be the best approach so that both consumers and oil companies achieve a win to win situation.

On the 15% increase, surely, as much as ERB is citing higher crude oil prices for the increase in fuel, what is worth mentioning here is that there have been a lot of reasons in the recent past for raising fuel prices and every reason is more confusing than the next. ERB says the prices of crude oil have gone up on the international market but what is currently pertaining is different. Prices of crud are low as hence questioning the price hike. Nevertheless, even in situation were crude oil prices were increased internationally, the 15% hike is just too significant.

Increases in oil prices are not good for the economy. Fuel costs have an effect on business and raising fuel prices mean higher business transactions. It costs more to drive the trucks that deliver raw materials, it costs more to deliver finished products to customers, and it costs more to drive or fly to a business location.

Further vendor relationships, manufacturing, raw material storage, marketing, customer support, sales, and billing will be affected by raising fuel costs. It is especially hard on big fuel users like truckers. But its also worth mentioning that, in covering all these costs the business fraternity slap them on secondary consumers that are mostly in this cases house hold consumers. It means that the purchasing power of these households will reduce as their disposable incomes are still fixed or stagnant and this might have a number of implications especially on health and nutrition.

On the other hand with specific focus on primary automobile consumers, it is also projected that this development might bring changes in travel plans and personal budgets. It might push some consumers to opt for public transport other than their private transport to either report for work, business or for their vacations. For those who use public transport, implications are that a fraction of people might opt walking to their businesses or reporting for work as it is envisaged that public transport operators both taxi and buses might increase their fairs to cover up.

In conclusion, CUTS-International calls for restructuring of the fuel adjustment process in Zambia to include all stakeholders. A more inclusive and participatory process would help not only lead to economic development but would also reduce poverty and enhance the consumer welfare.