President Hichilema Must Focus on Reducing and Not Maintaining the Fuel Pump Price – Antonio Mwanza

Fuel is the major driver of the economy and the main contributor to both, the high cost of living and the high cost of doing business that Zambia and Zambians are currently facing. Therefore the President must focus on reducing and not maintaining the prices of fuel since they are already way beyond and above the reach of most of our people.

Stabilising the price of fuel does NOT mean Reducing the price, it simply means maintaining the already very high prices a bit longer before they fluctuate again. And this is not the solution. The solution is price reduction not price stability.

However, you can not command fuel prices to go down. You must practically DEAL with the factors that are making the price of fuel go up. It’s the Economy, it’s not magic.

Here are the key factors that are making fuel prices go up;

1. The price of the commodity at the international market
2. The removal of subsidies; both Direct and Indirect Subsidies by the Government.
3. The continued depreciation of the Kwacha against the dollar. (Remember, we use the Dollar and not the Kwacha to procure fuel)
4. The high cost of transportation and storage including high security costs.
5. The lack of storage facilities to stockpile fuel for long term use.
6. Systematic corruption in the procurement process.

SOLUTIONS

1. Government must immediately suspend VAT and Excise taxes on all petroleum products. This will automatically reduce the price of fuel by a whopping 24%.
2. Government must cancel the Tax Holidays they have given the foreign mining companies; deal with the massive illicit financial flows, especially in the mining sector and use that money to subsidise fuel. (Zambia is losing an estimated 7.2 billion dollars from Tax breaks, tax evasion, tax avoidance, price transferring, VAT refunds and uncollected tax, annually).
3. Increase Economic Production by heavily investing in economic sectors such as Agriculture, Tourism, Energy, Manufacturing and Processing. This will increase exports thus increasing forex and ultimately strengthen the Kwacha against the major convertible currencies.
4. Government must decisively combat the systematic corruption in the fuel procurement processes.
5. Government must build adequate fuel storage facilities to enable it enter into long-term fuel purchase agreements that will help maintain the price of fuel even in the advent of instability of the price of commodity at the international market.

For as long as we do not effectively deal with the Economy and the points raised above, we can not reduce the prices of fuel.

Issued by
Antonio Mourinho Mwanza
Socialist Party Deputy General Secretary