Times of Zambia

By Davies M.M Chanda,

October 31, 2011

THE Wynter Kabimba commission of inquiry on the Energy Regulation Board (ERB) has heard that Zambia has the highest cost of fuel in the mainland Southern African Development Community (SADC) regional bloc because of procurement inefficiency and an expensive financing arrangement.

The Zambia Association of Manufacturers (ZAM), in its written submission before the commission has proposed that Government should rationalise the tax regime for both crude and finished products by lowering them.

According to a written submission presented to the commission by the Zambia Association of Manufacturers vice-president Steve Mwansa, the price of diesel in 2008 for Botswana was US1.19, Malawi US$0.96, Mozambique US$1.05, Namibia US$1.04, South Africa 1.04, Swaziland US$0.99, Tanzania US$1.05 while the cost in Zambia was about US$1.48.

The submission made available to the Times yesterday state that Government should also issue permits to oil marketing companies to supply areas according to their geographical location such as Nacala development corridor supplying Eastern Province while addressing alternative routes such as Angola and Mozambique.

Mr Mwansa said with good practices as recommended by ZAM, the country’s cost of fuel could reduce and estimated 19 per cent for petrol while diesel price would drop by 17 per cent and that Kerosene would sale at 21 per cent less than the current price.

ZAM cited poor feedstock cargo formulation, lack of adequate national reserves, inefficient feedstock processing and underdeveloped infrastructure for the importation of the finished products. The association also stated that the taxation system was the highest within the mainland SADC member states and that Government levies, duties and other taxes were higher in Zambia compared to other countries. ZAM has since called for a more transparent procurement system for crude oil and comingled petroleum which should also reduce supply chain costs.

There was also a call for balancing the reduction in tax on fuel with the increased collections from other sectors such as mining. The tax in Botswana, Malawi, Mozambique, Namibia, South Africa, Swaziland and Tanzania ranges from 0.06 to 0.44 per cent while in Zambia, it stands at 0.55 per cent. The commission was constituted by President Michael Sata last month to establish what was causing the cost of fuel to remain higher than the rest of the region and establish bottlenecks in the procurement system.

Mr Mwansa said there was need to invest in preventive maintenance for the Tanzania-Zambia oil pipeline to reduce on the losses and that ERB percentage fees should be reduced. The commission is expected to hold its sittings today at the Mulungushi International Conference in Lusaka before moving to Ndola on the Copperbelt Province where sittings will take place at the council chambers.