Economist Trevor Hambayi says reviewing the Energy Regulation Board (ERB)’s monthly fuel pricing mechanism could improve business planning, reduce inflationary pressures and support Zambia’s economic growth. Mr Hambayi told the media in an interview today that predictable fuel…

Economist Trevor Hambayi says reviewing the Energy Regulation Board (ERB)’s monthly fuel pricing mechanism could improve business planning, reduce inflationary pressures and support Zambia’s economic growth.

Mr Hambayi told the media in an interview today that predictable fuel prices are essential for businesses to accurately forecast production and transportation costs, enabling them to make informed investment and operational decisions.

He pointed out that frequent price adjustments make it difficult for businesses to plan effectively, given the uncertainty surrounding fuel costs, which are a significant component of the cost of doing business.

Mr Hambayi was reacting to President Hakainde Hichilema’s speech during the opening of the First session of the 14th National Assembly last Friday, in which the President highlighted the need to review the ERB’s monthly fuel pricing mechanism.

He explained that changes in fuel prices have a ripple effect across various sectors of the economy, as businesses pass on increased transportation and production costs to consumers.

“A review of the pricing mechanism should therefore consider how to provide greater predictability for businesses while ensuring that fuel prices remain responsive to underlying market costs,” added Mr Hambayi.

On the government’s plans to construct four oil pipelines connecting Zambia with Angola, Namibia, Tanzania and Zimbabwe, Mr Hambayi said the projects could help reduce fuel transportation costs.

“Transporting petroleum products through pipelines could be cheaper than road transportation, potentially lowering the cost of bringing fuel into the country and improving the efficiency of the supply chain,” he said.

Mr Hambayi also noted that diversifying fuel supply routes would also provide Zambia with alternatives for importing petroleum products, reducing its dependence on a single transportation corridor.

He, however, noted that the projects would require substantial capital investment, making private sector participation important given the fiscal pressures facing the government.

Mr Hambayi further said that the government should also ensure that local investors, particularly small and medium enterprises (SMEs), have access to financing to participate meaningfully in the country’s economic development, adding that ensuring that local businesses benefit from investment opportunities is essential to making the country’s broader economic growth agenda inclusive.

Meanwhile, another Economist Kelvin Chisanga has said public-private partnerships (PPPs) could provide a sustainable financing model for Zambia’s proposed oil pipeline projects, potentially reducing fuel transportation costs and improving the country’s economic competitiveness.

Mr Chisanga said the proposed pipelines by the government could help cushion the economy against rising fuel costs, which affect production, transportation and the cost of living.

“Improved fuel supply infrastructure could also stimulate investment in productive sectors such as mining and agriculture by reducing energy-related costs and supporting industrial activities,” he said.

He, however, said the sustainability of public-private partnerships will depend on the commercial viability of the projects, particularly their ability to generate sufficient returns to attract and retain investors.

Mr Chisanga said demand for petroleum products, supported by economic activities across key sectors, could create opportunities for investors to recover their costs and earn returns, provided the projects are properly structured.

He, however, cautioned that the government should carefully balance investments in petroleum infrastructure with its plans to promote electric vehicles as part of efforts to diversify the country’s energy and transportation systems.

“Although electric mobility was gaining attention, conventional fuel would remain important for transportation and industrial activities in the foreseeable future,” he added.

Mr Chisanga further said Zambia will therefore need to consider both developments when making long-term infrastructure investment decisions to ensure that public resources and private capital are deployed sustainably.