Another fuel increase likely, says Emmanuel Mwamba

Another fuel increase likely, says Emmanuel Mwamba

Anothe Fuel Increase Maybe on the Way, says Emmanuel Mwamba

By Amb. Emmanuel Mwamba

Listening to government officials justify the fuel, increase, one gets the idea that the incoherent message maybe as a result of lack of or withholding of information, absence of consultation among the key offices on the matter or lack of basic researched knowledge on the matter.

Presidential Spokesperson Mr. Anthony Bwalya has blamed transporters of the commodity of hiking costs and has made a startling claim that the tankers are owned by former cabinet ministers.

Other government officials claim that the fuel subsidy benefitted mine houses more than it did to ordinary people.

FUEL SUBSIDIES OR SUSPENSION OF TAXES AND RATES?

We now know that in 2020 and 2021, Government passed several statutory instruments (including; SI No.125 of 31st December, 2020, SI 89 of 2021).

The effects of these statutory instruments suspended all taxes on petroleum, diesel, kerosene and liquefied petroleum gas.

Secretary to Treasury Mr. Felix Nkulukusa disclosed that Government was spending $67million per month on fuel subsidies.

Information has since emerged that the $67million cost of “subsidy” per month is broken down as follows;

1. $26m price differential arising from exchange rate fluctuations and balancing of world market price. ( However the exchange rate fluctuations have settled around K16 per $1 since June 2021 to the high rate of K23 per $1between January 2021-June 2021. So this figure may largely be overstated.)

2. $41.4 m lost because of suspended on taxes and rates. (Customs duty 25%; VAT 16% and excise duty K2.07 per litre).

Ministry of Finance then came up with a figure of an estimated loss of revenue for the year 2021 would would be $809m.

It is clear from the above information that there has been no subsidy per-say but a suspension of taxes and rates on petroleum products.

THE ERB FUEL INCREASE

This brings cardinal questions.

1. Has government reinstated these taxes? It appears not. This means beginning January 2022, when the new Budget cycle starts, we may see a natural return of these taxes as government has not provided for their renewal or suspension in the 2022 Budget.

This will bring a sharp increment of fuel pump price as these taxes amount to 41% of the current fuel price.

2. What did ERB do? ERB appears to have increased the price of fuel pump price independent of the debate and factors driving the tax suspension or so called subsidies.

3. Is there another fuel price increase on the way? Likely yes as the Minister of Finance has made it very clear that no form of subsidy or tax suspension will be entertained to the petroleum sub-sector in 2022.

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