By Amb. Emmanuel Mwamba
Oil Marketing Companies (OMCs) have disclosed that their fuel imports orders have been placed on hold, until government clarifies the status of tax waivers that were implemented in 2020/2021.
In a letter by Oil Marketing Companies Association of Zambia President, Dr. Kafula Mubanga, written to the Minister of Energy, Hon. Peter Kapala, the Association informed the Minister that hundreds of trucks are marooned at the borders waiting for Government’s clearance on the issue of waiver of taxes on petroleum products.
He also stated that OMCs have since put on hold fresh oil purchases.
He said some service stations on the Copperbelt have started running dry and this may cause panic buying and fuel shortages.
He expressed concern at the supply insecurity that has risen as a result of Government position or lack of it on the matter.
BUT GOVERNMENT JUST INCREASED FUEL
On 16th December 2021, Energy Regulation Board Chairperson, Reynolds Bowa announced fuel pump price increase by K3.54 per litre from K17.62 to K21.16 while Diesel was increased by K4.56 from K15.59 per liter to K20.15.
In my articles; “Another Fuel Increase May be on the Way” and “Fuel Subsidy-How It came About”, I urged Government to come clean on the matter as another fuel pump price increase was due in January/February, 2022.
WHY ANOTHER IMMINENT FUEL INCREASE?
Following an agreement with the IMF on a Staff-Level Agreement with the Zambian authorities announced on 3rd December, 2021, Minister of Finance and National Planning, Dr. Situmbeko Musokotwane announced that all fuel and electricity subsidies will be removed beginning January 2022.
In 2020/2021 period, Government passed several Statutory instruments that suspended all taxes on petroleum products that included taxes on ; Petrol, Diesel, Kerosene, and liquefied petroleum gas.
The taxes suspended or waived on petroleum products were Customs Duty-25%, VAT 16% and Excise duty of K2.07 per litre.
This constituted the subsidy registering a loss to the Treasury of $41.4 million revenue per month.
Further, Government spent about $26million a month to absorb price differential arising from exchange rate fluctuations and world oil market prices.
This brought a total of $67.4 million per month spent on fuel subsidy.
CONCLUSION
What I find troubling is the lack of information and explanation on this brewing crisis.
Clearly, we have both fuel shortage and fuel increment looming.
The reinstatement of taxes on petroleum products since January 1st, 2022 requires an official explanation to allay fears and inform citizens of the pending increment.
Government has stated that the loss to the Treasury because of this subsidy was $807million annually.
Government also disclosed that it owes OMCs $507million in payment arrears.
So both Hon. Musokotwane and Hon. Kapala must take time and explain to Zambians about the measures they are implementing which are raising the cost of fuel and electricity that will immediately impact livelihoods of the people.