MINISTER of Energy Peter Kapala says reintroducing fuel subsidies can only be done depending on the situation.

Commenting on former Energy Minister, David Mabumba’s remarks that the only way government could address the looming increment in fuel prices was by reintroducing subsidies, Kapala said that was Mabumba’s opinion, adding that he would discuss the matter with Cabinet.

“Well, it depends on the situation, okay. That’s all I can say for now. I’m going to Cabinet to be discussing that alright? Mr Mabumba’s opinion is like any other Zambians, I’m sure you also have got an opinion, isn’t it? Let me first clear with my colleagues then I will give you a good answer,” he said.

Mabumba recently said there was nothing much Zambia could do to address the international market oil prices other than subsidising.

“There is not much that Zambia as a country can do to be very honest in terms of addressing the international market oil prices other than maybe subsidising. Because if you do not want your prices in terms of the domestic pump prices to be high, you have no choice as the government than to subsidise. And this is what has been happening in most of these African countries, the price of fuel is artificial simply because they want to cushion their economies,” he said.

And when asked how it was possible for government to re-introduce subsidies when it was complaining about inheriting empty coffers, Mabumba said it could look at the cost-plus model that was used to determine fuel prices and see which elements could be removed to ensure that the fuel pricing was reasonable.

“When you look at the fuel pricing model in this country, we use the cost-plus model where all the costs that you incur along the value chain you add them together. I’m sure you and I may recognise that not too long ago when the PF was in government, they removed the taxes on fuel. It was an opportunity cost for the country to collect that money in terms of taxes, but to provide relief to the people. It’s a subsidy in one way, anyway, where you remove maybe if there is tax on the fuel that you are selling, you remove. Even when you go to Ghana right now, because of this international pressure, that is what they have done, they have removed the tax component on the formula they use to determine the price of fuel,” said Mabumba.

“Even here, what the government can do is to look at the cost-plus model and see whether there are elements that can be removed out of that cost-plus model to ensure that the fuel pricing is reasonable, we are able to run the economy, businesses are able to sustain their operations, that can be done.”