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Zambians “closely watching” to See Removed Fuel Subsidies Improving Lives: Jesuit Scholars

JCTR Executive Director, Fr. Alex Muyebe. Credit: JCTR

Zambians are closely monitoring the government to ensure it fulfills the promise of using resources realized from the removed fuel subsidies are used “to cushion the poor and vulnerable” members of the society, officials of a Jesuit institution in Zambia have said.

The Zambian government increased fuel prices after removing subsidies on petroleum products on December 16.

While announcing the expected removal of subsidies on December 6, Finance and National Planning Minister, Situmbeko Musokotwane, said resources that are expected to be realized after the subsidies have been removed will result in more funds for free education, meal allowances to vulnerable pupils and students, hiring more medical personnel and teachers, and enhancing social protection programs.

“The Zambian people are closely watching to ensure that the resources realized from removal of subsidies are really going to be utilized to cushion the poor and vulnerable,” officials of the Jesuit Centre for Theological Reflection (JCTR) say in a Monday, December 20 statement.

JCTR officials say the government is required to take “deliberate measures to improve the living standards and conditions of the poor and vulnerable people in our society.”

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In the statement signed by JCTR Executive Director, Fr. Alex Muyebe, JCTR officials suggest that the United Party for National Development (UPND) government ensures the money it was spending on fuel subsidies “is well spent on free education, hiring of teachers and medical personnel, bursaries and meal allowances to vulnerable pupils and students and on other social welfare programs that benefit the poor and vulnerable in society.”

Fuel prices in Zambia have been constant since December 2019 when the previous Patriotic Front (PF) government introduced fuel subsidies. Until 16 December 2021, the government had been spending over US$ 67 million per month or US$ 800 million per annum on fuel subsidies.

In a December 16 statement announcing new fuel prices, the Energy Regulation Board (ERB) said it will start reviewing fuel prices every 30 days instead of 60 days as is the current government policy.

ERB also proposed to the government to continue with the current zero-rated Value-Added Tax (VAT) on petroleum products and reduce the excise duty from K2.07 per liter to K 0.64 per liter on petrol.

For diesel and LPG, ERB proposed excise duty be K0.00 per liter from K0.66 per liter. In the statement titled, “Will Resources Realized from Subsidy Removal Really be Utilized to Cushion the Poor and Vulnerable?”, JCTR officials say the proposed review of prices every 30 days “is a welcome position”

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“The review of fuel prices every 30 days and the pricing trigger band of 2.5% change in wholesale prices should be strictly adhered to, to allow for price stability when new fuel prices are introduced,” they say, adding, “This will provide for smooth and gradual fuel price adjustments.”

JCTR officials also laud the tax incentives by the ERB and urge the government to maintain it “as a mitigation measure which will lead to fuel prices gradually migrating to cost reflectivity without the requirement of subsidies.”

In the statement, the Jesuit scholars call on the government to ensure TAZAMA pipelines becomes operational so as to reduce the cost of transporting fuel in Zambia and the wear and tear of roads.

“The transformation of the TAZAMA Pipelines Limited into a finished products pipeline and the standardization of import cost lines to make procurement costs for petroleum products more competitive are some of the reforms that will support Zambia’s positive economic outlook,” Jesuit scholars at the Lusaka-based institution say in their December 20 statement.

 

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