Energy consultant Dr Johnstone Chikwanda has urged policymakers to exercise caution following the introduction of a K3 per litre fuel surcharge by the Energy Regulation Board (ERB).
The surcharge, introduced under the Stabilisation Fund within the broader Energy Fund framework, comes at a time when Zambia consumes approximately 260 million litres of diesel and petrol per month. At K3 per litre, the measure is projected to generate about K780 million monthly.
This is in addition to the existing Fuel Strategic Reserve Fund levy of K0.15 per litre, which currently generates approximately K39 million per month.
Dr. Chikwanda explained that the primary objective of the Stabilisation Fund is to facilitate a policy shift from monthly fuel pump price adjustments to a three-month review cycle. The intended outcome is to stabilise pump prices for at least three months at a time, thereby reducing volatility.
Based on current consumption levels, the Stabilisation Fund could accumulate approximately K1.56 billion over a three-month period, while the Fuel Strategic Reserve Fund would generate about K117 million within the same timeframe.
While welcoming the policy shift toward greater price stability, Dr. Chikwanda cautioned against a blanket application of the surcharge, particularly to large-scale fuel consumers such as mining companies.
He noted that many mining firms operate under bilateral fuel supply agreements governed by distinct pricing formulas, which already provide for price reviews at intervals of three months or longer. These mechanisms differ significantly from the pump price computation model that the ERB seeks to stabilise.
Dr. Chikwanda warned that extending the K3 surcharge to such arrangements could undermine the stable tax regime that Government has worked to establish within the mining sector.
According to his estimates, the surcharge could cost some large mining firms approximately K70 million per month, translating to nearly K840 million annually.
He has since advised policymakers to carefully assess the broader implications of the surcharge to avoid unintended consequences on investment certainty and fiscal stability in the mining industry.
