Business

State hailed for energy subsidies

ANGELA CHISHIMBA, Lusaka
GOVERNMENT should be commended for sustaining fuel and electricity subsidies for rural communities through a uniform price mechanism, Energy Forum chairperson Johnstone Chikwanda has said.
Mr Chikwanda said it is not possible to maintain a uniform price throughout the country without a subsidy.
“Most people think that all subsidies on fuel in Zambia have been abolished by Government -This is not true.  The majority of Zambia which is rural, still enjoys fuel subsides on petrol, diesel and kerosene,” he said.
Mr Chikwanda said this in response to a query on Saturday.
He said the subsidy also applies to electricity tariffs which are uniform throughout the country.
“In the absence of a subsidy, consumers in areas far from the refinery or generation plants are supposed to pay more due to cost of transportation. Rural Zambia, where the bulk of our people are located have been allowed to enjoy subsidised fuel to mitigate the hardships faced in far-flung areas,” he said.
Mr Chikwanda said the ‘cost plus fuel price model,’ a system which includes costs of buying, transporting and processing crude oil, currently being used in Zambia, if applied to finished product would mean the price of fuel becoming more expensive.
He commended Government for ensuring that rural areas have access to reliable and affordable petroleum products.
Mr Chikwanda said this will stimulate economic development and raise people’s standards of living.
“In my view, rural communities have been saved from spending a lot of money in fuel subsides from the time the uniform pricing mechanism was introduced. They are supposed to be paying higher than they are currently paying. With the falling of oil prices, they will benefit even much more,” Mr Chikwanda observed.



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