Socialist Party – SP President Fred M’membe, has expressed concern over the rapid increase in fuel service stations in Lusaka.
He described the trend as a “time bomb” that could render the industry unprofitable.
Dr M’membe questioned whether the Energy Regulation Board (ERB) has conducted a profitability analysis before issuing licenses.
He also highlighted the issue of service stations being too close to each other.
The SP President noted that the surge in new service stations is not driven by increased industry profitability. Given the low economic activity, fuel consumption volumes are likely to remain static or decrease year by year in the retail market.
“What this means is that the cake size is the same or getting smaller, and as we erect new service stations, the slice of the profitability cake is getting smaller. In the end, the volumes being pumped out of each service station will fall below the break-even point, making the entire industry unprofitable. Once we reach this point, assuming it hasn’t already happened, the cookie will crumble. We will then see a massive shutdown of service stations. Note that mines import their fuels, so arguing that it’s due to new mines opening is invalid reasoning,” he said.
Dr M’membe questioned the driving force behind this massive investment in service stations, asking, if there is an incentive that the eye cannot see.
He urged the ERB to explain the industry profitability analysis and the economic viability of this proliferation of service stations.
“Or what is the hidden incentive to attract this level of investment? Something looks wrong here,” he said.
Dr M’membe also suggested that money laundering might be a factor.
This is contained in a statement issued by SP Director Media Brian Hapunda.
