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Monday, January 24, 2022

Fuel Shortage and Fuel Pump Price Increment

Economy Fuel Shortage and Fuel Pump Price Increment

By Amb. Emmanuel Mwamba

Oil Marketing Companies (OMCs) have disclosed that their fuel imports orders have been placed on hold until the 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 the 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 a 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 Maybe 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 subsidies spent on fuel.

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.
The government has stated that the loss to the Treasury because of this subsidy, was $807million annually.

The 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 the livelihoods of the people.

17 COMMENTS

  1. This is just blackmail by the OMT’s. Caused by the closure of Indeni. Now the OMT’s have the monopoly of fuel imports and use that to leverage the increase. Thank you Bally for not managing this properly!

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  2. Where has this man been all along? He seems to gather enough data before writing, ALWAYS and his statements are never contradictory. I read his article about the release of school fees grants. Well explained. Wish he had not joined politics. He can ran a good and informative TV station.

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  3. This is what the IMF and Co insist we should do so that the environment is set for them to come in and do what they like without any resistance. We like to learn the hard way but these bunch of professional thieves have rehearsed these tactics in so many African countries. This is why we insist that we should ditch these imperialists.

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  4. The PF awarded huge fuel supply contracts to its cronies. So the fuel subsidy of $67 million per month was not only going to the OMC’s but indirectly into the pockets of the PF Bigwigs(Lawyer Lewis Moosho etc)
    There is no way HH and the UPND were going to allow this fraud to continue.
    Just wait and see. Some of these OMC’s will start winding up once the huge government contracts expire.

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  5. This man seems to know everything and yet
    He is not in government.Fuel price increase
    Is not possible as it was done recently.OMC
    Must be used with the old system and so are
    Trying to create unnecessary shortage.

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  6. Mwamba was a senior member of the looting PF GRZ that got us here in the first place………..

    And since he wants explanations………

    Can he also explain to the Zambian people how GRZ owes OMC s $500 million from the past regime ????

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  7. The problem with this govt is they are not very good at deseminating information and that would be their downfall look at how the information regarding issuing of fertiziler contract to a Dubai company has quietly been forgotten about…this govt is so bad at PR that they make crooks like Emmanuel Mwamba who was part of the PF rot seem like caring angels to the ignorant as witnessed by bloggers above. The Preident stated that he will give us the true price of the Gulfstream Jet but simply forgotten about…people are still waiting bulldozers moving in Forrest 27.

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  8. Someone here says the PF gave oil contracts to their friends… now if it was so, why was it cheaper than now when crooks are no longer in charge? Again like another one here has said, the Upnd PR is so poor that even a cadre can issue a policy statement.

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  9. Deja Vu – Its was cheaper because obviously its was subsidised to a tune of almost 1 billion dollars but still it wasn’t the cheapest in the region where there fuel is not subsidised.

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  10. Since mwamba wants answers……..

    Can he first tel Zambians how his PF GRZ accumulated half a billion dollars in debt to OMC companies……….?

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  11. #10 Tarino Orange… it’s like there so many contradictions here. Sorry to draw you back.. during campaigns it was the most expensive in the region.. after elections it became the cheapest in the region. I give up.

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  12. #13  Matumbo 
    January 9, 2022 At 8:20 pm

    “Is a subsidy a criminal offence? Doesn’t the government have a social responsibility of it’s people..”

    GRZ has a social responsibility,……

    but not subsides based on borrowed money and donner funds……….

    There is no way to get out of the economic quagmire without some sacrifice……..

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  13. Matumbo – It seems you dont want to face reality you only want to listen to sweet talk like a 16 year old teenage girl..you can not be up to your eyeballs in huge debt and paying more than half of your budget to debt servicing yet you are energy subsidising to a tune of 1 billion dollars a year.

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  14. Deja Vu – I am not UPND fanatical cadre or memeber of any party who dances to campaign soundbites like more money in your pockets …I go by facts as at Nov 2021 price of Zambian petrol was US 0.89 compared to Zimbabwe which was the most expensive at 1.637, Malawi at 1.374 and RSA at 1.257(Citinewsroom,2021) and according to Globalpetrolprices as at 03rd Jan 2022, Zambian Petrol per litre was $1.269 so going by that its still the least expensive.

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