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Friday, 26 March 2010

Parliamentary Question (Petroleum Imports)

More comedy from Ms Kapwepwe and Co on the politics of Zambian petroleum. She appears not to have a clue about what the government energy policy is. At every turn, her only response appear to be "ask ERB" :

Importation of petroleum products, Oral Answer (332), Edited Transcript, 10th March, 2010 :

Mr D. Mwila asked the Minister of Finance and National Planning: (a) how much money in the form of tax the Government lost as a result of waiving import duty on petroleum products to mitigate the impact of the fuel shortage; (b) how long the suspension of import duty lasted; and (c) what the total amount of petrol imports were at the end of the period at (b).

Ms C. M. Kapwepwe: Mr Speaker, the estimated total revenue foregone as a result of suspending duty on petroleum products is K98,350,000,000. The House may wish to know that customs duty on crude oil which Indeni Petroleum Refinery Company Limited usually imports is 5 per cent whereas duty on finished diesel and petrol is 25 per cent. This means that it is more expensive to import finished petroleum products than crude oil. Finished petroleum products are

often imported into the country by road. This means importation is more expensive because of the cost of transportation and insurance. The suspension of the customs duty is, therefore, intended to reduce the cost of importing finished petroleum products whereby averting a possible increase in the pump price. As regards part (b) of the question, the suspension of import duty covered the period 21st October to 31st November, 2009. This is the period when Indeni Petroleum Refinery Company Limited was expected to remain closed for maintenance and rehabilitation. With regard to part (c) of the question, the total amount of petrol imports into the country for the period of suspension is 42,168 cubic metres of 42,168,000 litres.

Mr D. Mwila: Mr Speaker, what measures did the Government put in place to fill the gap on the revenue loss in 2009 which was about K8 billion?

Ms C. M. Kapwepwe: Mr Speaker, I thank the hon. Member for the follow-up question. Obviously, there are unplanned for situations in the budget which are catered for in normal expenditures and these are what we call contingencies. We also have savings in some overall line items in any financial year. Being a responsible Government, we had to react and take this measure to ensure that we did not have further disruption in the economy with prolonged periods of shortage. I think it was a responsible thing to do. In the context of the loss, if we had not taken action, the loss would be much higher than the amount we lost on the waiver.

Mr Nsanda (Chimwemwe): Mr Speaker, now that the supply of petroleum products has stabilised, when is the Government going to reduce the prices?

Ms C. M. Kapwepwe: Mr Speaker, I think that question has been raised on the Floor of the House many times before. The answer that has been given is that we already subsidise the fuel pump price. Therefore, we will continue reviewing our position as you know the cost of petroleum products is determined by the international markets, and we can only plan and mitigate that cost as far as we have the resources available to do this.

Ms Mwape: Mr Speaker, was the waiver compulsory to all oil companies or just a select few? Secondly, what has led to the exodus from Indeni of some international oil companies like Total Zambia Limited and now the British Petroleum Company Limited?

Ms C. M. Kapwepwe: Mr Speaker, the waiver was on the importation of petroleum products which normally attracts a duty of 25 per cent. I am not sure where the hon. Member got the information from. I think it might be speculative to start giving reasons commercial decisions are made by companies. It will be purely based on a very short-term waiver which only existed for a month. I think it might be some element of speculation. There must be reasons a company would make such a decision and I am not privileged to that information.

Mrs Masebo: Mr Speaker, at the time the Government put the waiver, was the price of fuel controlled by the Government or was it left to the oil companies to determine? Secondly, I notice that every time there is a fuel shortage, companies are quick to increase prices, but when the Government gives a waiver, they take long to reduce the prices. It is like the Government does not have a mechanism to ensure that the price of the commodity is controlled, considering that the Government is losing a lot of revenue. Mr Speaker, although they may appear to be two questions, it is basically one question on whether the ministry regulates the price of fuel in line with the Government agreements on waiving tax to lower the price for the consumers.

Ms C. M. Kapwepwe: Mr Speaker, the Government has put in place the Energy Regulation Board (ERB) which is mandated to regulate issues pertaining to prices and how the industry is performing. The Government has mandated the ERB Board to deal with all such matters.

Mr Kambwili: Mr Speaker, we have been told, on several occasions, that the Government subsidises petroleum products such as petrol and diesel. Why is the pump price of fuel so high in Zambia compared to South African and Zimbabwe whose governments do not even subsidise the prices?

Ms C. M. Kapwepwe: Mr Speaker, this question has been raised many times on the Floor of this House and the able hon. Minister of Energy and Water Development has always given us an answer. There are many factors at play in the determination of pump prices and as I said earlier, we have ERB in place which is mandated to take all these issues into consideration before arriving at a price.

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