The Effect of Government Oil Pricing Changes on the Financial Performance of Oil Marketing Companies in Lusaka
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Abstract
This study investigated the effect of changes in government oil prices on the financial performance of oil marketing companies (OMCs) in Lusaka, Zambia, from 2015 to 2023. With the petroleum sector being a cornerstone of Zambia's economy, the research aimed to provide insights into how governmental interventions affect the operational efficiencies and financial stability of OMCs. The scope of the study was limited to OMCs operating within Lusaka, focusing on the financial performance influenced by pricing regulations. A descriptive research methodology was employed for the quantitative study, with a simple random sampling technique used to select 55 significant OMCs based in Lusaka. Structured questionnaires were administered both online and in person, with follow-up calls. Data analysis involved descriptive statistics, correlation, and regression analysis, which determined the correlation between government oil pricing and financial performance. The findings indicate a significant impact of government oil pricing on the financial performance of OMCs in Lusaka. Fluctuations in regulated prices directly affected profitability (ROA), liquidity, operational efficiency, market share, and sales revenue. The study identified strategies employed by OMCs to mitigate the adverse effects of unfavourable pricing policies, including cost optimization and supply chain adjustments. In conclusion, government oil pricing changes have a significant influence on OMCs' financial health and performance in Lusaka. The study recommends that policymakers adopt balanced pricing strategies that consider both government revenue and the sustainability of OMCs. Furthermore, OMCs should focus on enhancing operational efficiencies and diversifying revenue streams to better navigate policy-induced price volatilities. Future research should explore the long-term effects of government pricing on investment and competition within the Zambian oil sector.
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Copyright (c) 2025 Charity Mundambu, Bupe Getrude Mutono-Mwanza (Author)
This work is licensed under a Creative Commons Attribution 4.0 International License.
Charity Mundambu, Graduate School of Business Studies, University of Zambia, Lusaka.
Graduate School of Business Studies, University of Zambia, Lusaka
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