Government, Fuel Companies Make Peace
09 AUG, 2019 - 00:08
Photo: Eddington Mazambani
Zvamaida Murwira
Senior Reporter
Zimbabwe Herald
Government and the oil industry have broken an impasse over duty payment, in a development expected to improve fuel supplies following week-long challenges.
Zimbabwe Energy Regulatory Authority (ZERA) acting CEO Mr Eddington Mazambani said most service stations had started taking delivery of fuel from Msasa and Mabvuku after an agreement was struck between the oil industry and the Government.
Mr Mazambani said this while giving oral evidence before the Parliamentary Portfolio Committee on Energy and Power Development chaired by Binga North legislator Mr Gabbuza Joel Gabuza (MDC-Alliance) yesterday.
He said the gap in fuel supply came about after Finance and Economic Development Minister Professor Mthuli Ncube reviewed the fuel duty model from a fixed amount to a percentage based on the total costs of bringing in the commodity (free on board).
“What that did is when fuel is procured in the country, the fuel companies will have FOB prices which will in turn affect the CIF (cost, insurance and freight) which is used for duty purposes. But ZERA set a maximum price using a certain CIF cost which then differed from trader to trader which made it difficult for traders to continue to make fuel available when their prices are different from what ZERA would have set. We then agreed with the Ministry of Finance together with Zimbabwe Revenue Authority that the duty set
by Zera at the beginning of the week becomes the absolute amount for the whole week until Sunday because our pricing regime is Monday to Sunday,” said Mr Mazambani.
“That agreement was only implemented yesterday (Wednesday). We engaged from Monday and agreed late on Tuesday but it was then implemented Wednesday. So from yesterday, we managed to see an increased level of pick up from National Oil Infrastructure Company because it was now clear what duty was being charged by Zimra. So it has since been addressed, the issue about transport was coming from social media, the real issue was on duty, so every Friday we agree on the applicable duty for the following week and that is communicated to NOIC. We expect the situation to improve. I am not saying there will be no queues but we will revert back to our usual situation where we will have constrained supply but at least it will be available.”
He said the prevailing amount of duty payable on petrol was $2,73 from $1,10 while diesel was pegged at $2,48 from 90 cents.
“Another thing that I need to mention is that price of fuel is going up internationally, there are issues to do with Iran and the USA, there are tankers that are being seized within the high seas thus affecting the availability of fuel internationally, thereby affecting the price,” said Mr Mazambani.
He said it was difficult to determine continued stability of fuel price given the new model of percentage based and the exchange rate.
Turning to coupons, Mr Mazambani said most service stations were now issuing out coupons based on monetary value and not quantity.
“This was after they suffered huge losses in January this year when they were forced to honour face value of coupons in terms of quantities when Government adjusted prices of fuel.
“Some of them wanted to rate the coupons but we then said you have to honour the literage. I am still to find those still operating in quantity because it becomes risky,” said Mr Mazambani.
He said they were facing problems in ensuring service stations do not to charge in foreign currency because Statutory Instrument 143/2019 which ushered in Zimbabwe dollar as the only legal tender did not clearly define offences and penalties.
He, however, said they were dealing with the issue by revisiting the conditions for licensing.
Photo: Eddington Mazambani
Zvamaida Murwira
Senior Reporter
Zimbabwe Herald
Government and the oil industry have broken an impasse over duty payment, in a development expected to improve fuel supplies following week-long challenges.
Zimbabwe Energy Regulatory Authority (ZERA) acting CEO Mr Eddington Mazambani said most service stations had started taking delivery of fuel from Msasa and Mabvuku after an agreement was struck between the oil industry and the Government.
Mr Mazambani said this while giving oral evidence before the Parliamentary Portfolio Committee on Energy and Power Development chaired by Binga North legislator Mr Gabbuza Joel Gabuza (MDC-Alliance) yesterday.
He said the gap in fuel supply came about after Finance and Economic Development Minister Professor Mthuli Ncube reviewed the fuel duty model from a fixed amount to a percentage based on the total costs of bringing in the commodity (free on board).
“What that did is when fuel is procured in the country, the fuel companies will have FOB prices which will in turn affect the CIF (cost, insurance and freight) which is used for duty purposes. But ZERA set a maximum price using a certain CIF cost which then differed from trader to trader which made it difficult for traders to continue to make fuel available when their prices are different from what ZERA would have set. We then agreed with the Ministry of Finance together with Zimbabwe Revenue Authority that the duty set
by Zera at the beginning of the week becomes the absolute amount for the whole week until Sunday because our pricing regime is Monday to Sunday,” said Mr Mazambani.
“That agreement was only implemented yesterday (Wednesday). We engaged from Monday and agreed late on Tuesday but it was then implemented Wednesday. So from yesterday, we managed to see an increased level of pick up from National Oil Infrastructure Company because it was now clear what duty was being charged by Zimra. So it has since been addressed, the issue about transport was coming from social media, the real issue was on duty, so every Friday we agree on the applicable duty for the following week and that is communicated to NOIC. We expect the situation to improve. I am not saying there will be no queues but we will revert back to our usual situation where we will have constrained supply but at least it will be available.”
He said the prevailing amount of duty payable on petrol was $2,73 from $1,10 while diesel was pegged at $2,48 from 90 cents.
“Another thing that I need to mention is that price of fuel is going up internationally, there are issues to do with Iran and the USA, there are tankers that are being seized within the high seas thus affecting the availability of fuel internationally, thereby affecting the price,” said Mr Mazambani.
He said it was difficult to determine continued stability of fuel price given the new model of percentage based and the exchange rate.
Turning to coupons, Mr Mazambani said most service stations were now issuing out coupons based on monetary value and not quantity.
“This was after they suffered huge losses in January this year when they were forced to honour face value of coupons in terms of quantities when Government adjusted prices of fuel.
“Some of them wanted to rate the coupons but we then said you have to honour the literage. I am still to find those still operating in quantity because it becomes risky,” said Mr Mazambani.
He said they were facing problems in ensuring service stations do not to charge in foreign currency because Statutory Instrument 143/2019 which ushered in Zimbabwe dollar as the only legal tender did not clearly define offences and penalties.
He, however, said they were dealing with the issue by revisiting the conditions for licensing.
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