eBusiness Weekly
Business Writer
This week Finance and Economic Development Minister, Prof Mthuli Ncube, amended section 22H of the constitution on the National Oil Company of Zimbabwe (NOCZIM) debt redemption and strategic reserve levy through Statutory Instrument 31 of 2022.
The levy increment comes as the country continues to increase pump prices that motorists and industry say has been inflated by too many taxes on the product.
The increase in the levy has also come at a time when global oil prices are on the rise chiefly as global players respond to development in the Far East where Russia invaded Ukraine. Russia is one of the major global players in the fossil fuel sector.
“With effect from the 1st of February, 2022 and for a period of 30 days, section 22H (“NOCZIM debt redemption and strategic reserve levy), any person licensed by the Minister responsible for energy to import the petroleum product in bulk, be calculated at the rate of zero comma zero eight seven (0,087) United States dollars per litre of diesel or zero comma zero eight seven (0,087) United States dollars per litre of petrol,” the Statutory Instrument reads.
Treasury increased the levy by 85,11 percent to US$0,087 from US$0,047 on diesel imports, and 52,63 percent from US$0,057 per litre to US$0,087 of imported petrol.
In February, diesel price was adjusted to $168.17 per litre up from $149.55 while blend is now at $152.87, according to a statement by the regulatory authority.
The United States dollar price has been pegged at US$1,44 per litre from US$1.38 for diesel and US$1.41 for petrol.
Oil prices have been on the rise due to the Russia-Ukraine war. However, Russia does not directly export its refined oil to Zimbabwe and the latter’s imports from Russia only account for 1 percent of the country’s total imports.
Zimbabwe relies on two countries for its refined oil supplies; these are Singapore and the United Arab Emirates (UAE). But, Singapore is not an oil producer but a refiner and relies on imports, mainly from the UAE for its crude oil supplies.
Without Russia the other oil producing nations will be faced by huge demand, which will eventually increase scarcity of the commodity leading to increased prices, observers say.
The Brent crude oil price blasted past US$111,00 a barrel on Wednesday, its highest level since early July 2014, despite a decision by the United States to release, with its allies, about 60 million barrels from their strategic reserves, in an attempt to stabilise global energy markets. US light crude on the day also jumped more than 6 percent, to US$109.48 a barrel, its highest since September 2013.
Locally as a net importer of fuel, we will be hit by the price increase, but our authorities have prioritised income generation at the expense of cost push inflation.
Duty accounts for US$0,30 for every litre of fuel imported via pipeline and US$0,35 per litre for fuel imported through road haulage. The Zinara Road Levy (US$0,06), Carbon Tax (US$0,04) and other taxes including the Debt redemption tax are then added on top to take the total taxation to US$0,49 per every litre consumed locally.
Businesses in the petroleum value chain, especially the thriving retailers, will then pay ZERA licence fees and additional taxes levied on operating income. Close to 90 percent of the fuel imported in Zimbabwe is transported via the Beira to Harare pipeline while 10 percent is imported through road haulage by independent petroleum companies.
