fuelshortage
GOVERNMENT should consider removing fuel subsidies as it aggravates fiscal imbalances and negatively affect priority public spending because an average of US$30 million is spent over a short period of time, says Energy Forum Zambia chairperson Johnstone Chikwanda.

He said the Energy Forum Zambia had consistently fought for the elimination of fuel subsidies because not only did they aggravate fiscal imbalances but also depressed private investment and distorted resource allocation.

He said although fuel and electricity subsidies appeared to be good, they in actual sense benefited a narrow section of population and benefited people already well off when compared with the majority who had little or no access to energy products.

“Our argument has been that subsidies although they appear to be good are very pervasive and have a tendency to impose substantial fiscal and economic costs. Subsidies aggravate fiscal imbalances, negatively affecting priority public spending, depress private investment and distort resource allocation.

“Our estimation is that the Zambian government is currently spending an average of $30 million over a short period of time in fuel subsidy in a bid to support a narrow section of the public including the corporate world,” Mr Chikwanda said.

He said the Energy Forum Zambia was uncomfortable with Government spending millions of dollars in fuel subsidies to cushion a narrow segment of society at the expense of other priority areas such as education and health.

“While we hold that fuel is part of the life blood of the economy, we call upon Government to reconsider its position and abolish or significantly phase out the fuel subsidy so that the savings can be channeled to other pressing areas,” Mr Chikwanda said.

He explained that while Government may be trying to protect the general public, it was in advertently subsiding the corporate world.

He said if Government wished to be shielding a part of fuel consumers from time to time, the Energy Regulation Board (ERB) may wish to consider coming up with a different fuel pricing mechanism that had capacity to limit who benefited from the huge subsidy.

“In the same vein, we call up the ERB to immediately rise to the occasion and announce measures that will assist Government to mitigate the impact of this fuel subsidy on the Treasury.

“By so doing the ERB will be demonstrating its mandate of safe guarding the interests of all stakeholders which include Government and the majority of our people who have little or no access to energy products,” he said.

Mr Chikwanda also challenged beneficiaries to be grateful for the gesture from the Government which they had enjoyed since last year.

He further challenged opponents of subsidy elimination to justify why this kind of money must continue being spent at the expense of other priority areas.

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36 COMMENTS

  1. Ofcourse it does

    WHy should it benefit a lot

    The rich are 10% and are a few 80% are poor and they are a lot

    This is normal anewhere even in the UK

    Shut it Johnstone

    MS is coming

    Thanks

    BB2014

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  2. Mr chikwanda unfortunately those few prevaleged are the producers of wealth and employment for the country. Removing fuel subsides will only see fuel price raises which will be passed on to the final consumer, all prices will have to raise.

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    • Govt can spend money in certain well planned areas like agriculture, manufacturing and people empowerment projects. I would have agreed with this argument if Govt was practicing prudent financial allocation because currently we see reckless spending on a bloated cabinet/Govt, excessive travelling and going-around-the-country-for nothing trips and much more badly planned and executed developmental projects like districts, thinly tarred roads, bad hydro electricity production equipment which is wasting water etc. then we can look at removing fuel subsidies which help the poorest actually.

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    • well said Sâka, this guy does not realise the the poor will feel it more because everything they eat and use is transported by vehicles that use fuel. That is why we want educated people who can understand these things;

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    • Just to let you know that Chikwanda is a PF appointee as Head of the INDENI Board…and just like all other PF people, it took him almost 5 years to realise PF is clueless

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  3. I thought the fuel subsidies were long removed by Sata. Fuel is quiet expensive despite a drop in the price of oil per barrel on the international market. For sure government is broke and now fishing around for any imaginary savings.

    Why keep milking a cow till blood comes out.

    They have done nothing to ensure the economy is vibrant for the needed taxes, and the milk is running out.

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  4. Comment:it will be a good move not only selfish individuals to benefit we all need to feel the good part of subsides

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  5. Even the poor suffer when public transport costs and commodity prices go up resulting from high fuel costs.

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  6. Which subsidies are these?
    When were they restored, because these were removed in 2013 by the PF government.

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  7. In zambia we have three groupings. First group those who have more than enuf eg the chikwandas, the kavindeles second group comprises those who have enuf. Then those who dont have. if subsidies, free education and medical fees were removed from groups one and two it will be ok. All we need is CSO to provide data.

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  8. Those with income of a salary of least paid civil servant can afford school fees from primary to secondary schools. They can also manage medical fees. lets leave subsidies and free services to widows and physically challeged pipo. CSO can provide such informations. We want to start paying borrowed money build more infrustructure

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    • We leave subsidies to widows? Widows like who? Regina Chiluba Mwanza, Maureen Mwanawasa, Inonge Wina?

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  9. Removal of subsidies will have a negative effect on the livelihood of the citizenry.I do not know why this nation is so insensitive to the plight of the poor?Complete removal of subsidies will injure a lot of poor people.The cost of production will go up and to cushion that impact,its the poor citizen who will shoulder all that cost.
    That is why I find it diabolical to introduce loans in higher institution of learning.This will mean poor people not accessing higher education because parents will not afford to be tied to a loan for the rest of their lives.Bursaries is a better facility other than loans.The problem that is there with bursaries is the administration of the scheme.Subsidies should not be removed wholesomely.

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  10. Am totally disgusted by this so called energy expert
    What a narrow if not shallow and hollow thinking.
    Yes it is the few who own cars but fuel increases impacts production chain from which goods and services are made. Thus fueling inflation if you increase fuel.
    Its baffling. We thought the reason for not decreasing the fuel prices not with standing the escalated exchange rate was actually removing subsidies.

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  11. Fuel subsidy benefits everyone through the multiplier effect. Who are those few that this Chikwanda is talking about? Those few, even if they drink the fuel right into their mouth, they may atleast eat less of some other food and this will benefit even their dogs but I am sure those few dont drink the fuel instead they put it in their tractors, hammermills, etc where an operator who may be a simple worker is employed or in a bus where the those without vehs may jump on at a reduced fare. This chikwandanomics is hollow and not connected

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  12. Imwe subsidies were removed long time ago by PF government.You have short memories or what.? ou have ZIKA brains?

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  13. I thought Sata removed subsidies to fund infrastrusture development only found out last week that they U-turned….this man is talking sense its no wonder our reserves are depleted!

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  14. Is anyone allowed to ask why our plants conveniently break down or are supplied with the wrong product? Who is benefitting from the mediocre method of running the energy industry? Those middle men keep the fuel prices high. Simple. Oops. Are we not supposed to notice…

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  15. which subsidies is this one now?If my memory serves me right this issue was done with during the early days of PF government with the late Micheal Chilufya Sata.Chikwanda ngati wakutha yende uka gone!

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  16. Comment: Is fuel really subsidised in Zambia? If so how much is the subsidy per litre of petrol and diesel? Why doesn’t Johnstone give us the FOB cost structure of fuel in Zambia. I find it hard to believe that fuel is being subsided in Zambia. In South Africa the Rand has deprecited by more than 20% but fuel is not subsidized at all. Mr J Chikwanda needs to illustrate the fuel subsidy calculations first b4 claiming that fuel is subsidized in Zambia. Zikomo kwambiri!

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  17. Chikwnda is very confused…this article lack substance and facts…who is beneftiting from fuel subsidy…and what other national pressing issue do chikwanda want GRZ to focus on …when we have energy crisis… These energy experts really are a bunch of ..idols

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  18. Mr Chikwanda my question to you is that if the fuel is subsidized why is it (allegedly) more expensive than in other countries in the region? Would you then admit that the PF lied during its 2011 election campaign when it claimed that the price of fuel was heavily taxed and was the most expensive and that it would reduce its price was voted into power. The only area I see where the PF has excelled is in infrastructure development but even here there have been hiccups such as unnecessary delays in the execution of projects, incompetency by Zambian contractors, some shoddy work on some projects like the road to Katondo Clinic in Kabwe. Let it be a lesson that when some opposition parties promise you the moon take it with a pinch of salt.

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  19. Chikwanda just come back home to Zambia and stop talking amafi from RSA where you are enjoying icalo chabene, you are talking shi***t.

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  20. We have been told fuel is expensive in Zambia because there a lot of middlemen in the procurement process. So why don’t u start by removing middlemen first?

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  21. If fuel is subsidised, why are there excise duties, VAT, import levies, etc, on the price of fuel? Additionally, oil companies pay hefty coporate taxes. It is not true that fuel is subsidised.

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  22. i thought the subsidy was removed a long time ago and we debated this issue, it was closed by Kambwili who took a firm stance to justify the increase in fuel prices.

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  23. In Botswana Fuel cost P7.49 per litre and the exchange rate is about P10 to the US Dollar..and there are no susbsidies.Fuel in Zambia would cost less than K8.00 if our mathematics were right.The issue of depreciated exchange rate is a total lie because the dollar rate to the kwacha is around K10 as well…

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  24. LUSAKA, Thursday, May 2, 2013 – His Excellency, Mr. Michael Chilufya Sata, President of the Republic of Zambia, has said the removal of the subsidy on petroleum products will enable the state to have more finances available for spending and guarantee proper implementation of all government programmes and projects.

    So which fuel subside is corrupt Chikwanda talking about? This is the and Pastor Nyirenda in the north assembly church who tried to bribe a journalist by offering her a job at Inden. If he can behave like in the church, I’m not surprised that he can come our like this.

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    • Well done @Kambwili!! This is information the lazy LT should have ACTUALLY availed ALONGSIDE the report on this Chikwanda guy who seems to have woken up from a stupor to support some repair of a barn door when the horses have already bolted. So perhaps now it remains to figure out when the subsidy was reinstated between May 2, 2013 and now…

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