Lusaka, December 27, 2019
According to a statement issued by the Energy Regulation Board (ERB) Board Chairperson, Raymond Mpundu, petrol has been adjusted from
- K15,98 per litre to K17,62 per litre for petrol
- K14,23 per litre to K15,59 per litre for diesel
- K13,02 per litre to K15,39 per litre for kerosene
- K16,52 per litre to K17,88 per litre for LSG
Further to this, the ERB also communicated that effective 1 January 2020 they would be increasing tariff for electricity.
While the fixed monthly charge has been abolished,
- the life-line tariff has been reduced from100kwh to 200kwh, and its price increased by 300 percent from 15c to 47c.
- the tariff for consumers who now purchase between 100kwh and 200 kwh has been increased by more than 500% from 15c to 85c, and
- the tariffs for consumers who purchase more than 300kwh has more than doubled to K1,94.
The Consumer Unity and Trust Society (CUTS) is deeply concerned with the implications that these increases of the costs of these key inputs will have on the cost of living for consumers. Fuel and electricity are key inputs into production process and the increase in the cost of these products will result in an increase in the operating costs of producers and retailers. When this occurs it is always consumers who suffer the brunt of this burden and as such are most negatively affected by these increases.
It is also important to note that these hikes are taking place on the back of an already increasing cost of living. This month the Zambia Statistical Agency recorded an inflation rate at 11,7% which is 3,7 percent higher than the target in the Medium Term Expenditure Framework. With these newly announced increases in fuel and electricity consumers can expect to see inflation increase even further in 2020.
In addition to the expected increase in the cost of goods and services on the market, both of these products are essential to households. The increase in the cost of petrol and diesel will increase the cost of transportation and the increase in the cost of electricity, kerosene and LPG is going to increase the costs of consumers’ household expenditures. Given that both of these goods do not have substitutes we are likely to see reduced disposable income particularly for low-income households. To adjust for this, these households will begin to redirect resources from key other areas of expenditure to account for these increases.
Earlier this year the government halted the hike in energy tariffs as it indicated that it would result in an increase in poverty. We applauded the government for this decision as indeed, according to our research, the electricity hikes would have resulted in 165 000 people falling into poverty. Given that the economy has worsened since these tariffs were first proposed, this number is likely to increase. We therefore urge the government to indicate:
- What cost-cutting measures ZESCO is undertaking to reduce inefficiencies within the institution that are also contributing to the cost of electricity
- What the period of implementation will be for the proposed electricity tariff hikes as consumers will need time to adjust their consumption patterns
- What measures it is putting in place to ensure that the increase in the cost of living for consumers is not worsened in 2020
It is imperative that the Government communicate how to it intends to address these issues that will arise due to the increase in the prices of both fuel and electricity and also how it intends to mitigate their effects on low income households.
————————————
For further information please contact: Chenai Mukumba, CUTS Centre Coordinator. Email: lusaka@cuts.org or phone: 097 8055 293.