The Effects of Monthly Price Adjustments of Fuel by Energy Regulations Board (ERB) on Petroleum Companies in Zambia
- 1 Graduate School of Business, The University of Zambia, Lusaka, Zambia
- 2 Technonlogy Advisory and Development Unit (TDAU), The University of Zambia, Lusaka, Zambia
Abstract
This study investigates the effect of fuel price adjustments by Zambia’s Energy Regulation Board (ERB) on petroleum companies, particularly following the removal of fuel subsidies in December 2021. The research examines the impact of the ERB’s pricing mechanisms, including the perceived volatility of the monthly review cycle, on operational costs, profit margins, and financial forecasting. Using a mixed-methods approach, combining quantitative analysis of financial reports and ERB data with qualitative insights from interviews and focus groups, the study reveals a significant negative relationship between fuel price increases and company revenues. Key factors influencing price adjustments include global oil prices, exchange rates, and transportation costs. Respondents criticized the ERB’s pricing framework for its lack of transparency and predictability and highlighted the need for a transition to a quarterly review model to provide greater stability. The study recommends implementing a quarterly fuel price review, alongside predictive pricing models, a price stabilization fund, and enhanced transparency, to mitigate price volatility, balance stakeholder interests, and support industry stability. These findings contribute to understanding fuel pricing dynamics and their implications for Zambia’s petroleum sector.
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