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Fuel pump price cut will boost economy

THE announcement by the Energy Regulation Board that it has reduced the fuel pump price is indeed good news as it will reduce the cost of doing business and impact the economy positively.
Addressing the media yesterday, ERB Board chairman Raymond Mpundu said the pump price for petrol has been reduced from K16.06 to K15.20 per litre resulting in a difference of K0.86.
“The new prices are to take effect today [yesterday] February 28, 2019 at midnight. The pump price for diesel has gone down from K14.65 to K13.43 resulting in a decrease of K1.22.
“The price of kerosene per litre remains unchanged at K11.34 while the pump price of low sulphur gas oil (LSG) is K15.72 from the previous K16.94 translating in a reduction of K1.22.
“This adjustment of pump prices is consistent with Government policy to review fuel prices for every cargo, which lasts about 60 days, taking into account changes in the economic fundamentals at any one given time,’’ Mr Mpundu said.
Given that the reduction has been largely influenced by movements in international oil prices, the exchange rate between the local currency and the United States dollar and recent amendments to the Customs and Excise Act, Government deserves commendation for its contribution through good policies.
Consistent reviews of fuel prices for every cargo is also evidence that the Patriotic Front government under the able leadership of President Edgar Lungu is eager to make the lives of people better through reduction of fuel prices among many other things.
All well-meaning Zambians have every reason to celebrate the reduction because of the positive impact it will have on their lives.
While some critics may view the reduction as insignificant, it is no doubt a step in the right direction and the cumulative effect will certainly be huge across all sectors.
It is a well-known fact that fuel is a major cost driver that cuts across all sectors of the economy and any upward or downward adjustment comes with ripple effects.
The reduction in the pump price is therefore heartening because it will impact the economy positively by reducing the costs of production.
The reduction in fuel pump prices is expected to trigger a reduction in transportation, which is one of the major costs in production and doing business.
A drop in transport and production costs will also improve the living standards by reducing the cost of goods and services. And when the prices of goods and services go down, inflation also subsides, which also impacts interest rates and the economy as a whole.
When people spend less on transport and goods, it means they will have more disposable income to invest in other needy areas thereby improving their living standards.
In the mining and manufacturing sector, fuel and diesel in particular is used to run the heavy industrial machinery. The reduction in fuel translates into mining and manufacturing spending less on production thereby increasing levels of profitability and tax paid to Government.
Fuel is also used to produce chemicals such as fertilisers and pesticides used in modern agriculture.
Reduced fuel costs therefore underpin increased production thereby guaranteeing food security and foreign exchange from exports.
The reduction in the commodity will also stimulate gross domestic product growth.
While ERB has made the fuel pump price official, there are usually some deviant businesses who would want to stick to the old prices in the name of old stock.
The message from ERB is loud and clear: effective last midnight, all filling stations should adjust prices accordingly.
It is good that ERB inspectors will immediately be dispatched to monitor service stations and ensure that they effect the revised prices.
Consumers should also heed the advice by ERB to report any service station that fails to implement the price reduction through the toll-free line, 8484.
Similarly we expect all businesses and especially transporters to pass on the benefits of the reduction to consumers.