FINANCE and National Planning Minister Dr Situmbeko Musokotwane says government is already subsidising the price of fuel by removing some taxes and it cannot do more than that because this can negatively affect other sectors.

And Dr Musokotwane says government cannot reveal the creditor country which is delaying Zambia’s debt restructuring process because that’s not diplomatic.

Meanwhile, Energy Minister Peter Kapala says Copperbelt Energy Corporation has signed a new bulk agreement with Zesco which was subject to approval from the Attorney General and Energy Regulation Board (ERB).

Speaking during the First Quarter Economic and Budget Implementation Performance Review Symposium, Thursday, Dr Musokotwane said re-introducing fuel subsidies was unattainable.

“First of all, I want to commensurate with everyone because obviously, this is something that brought a lot of hardships to everyone in the country given where the price of fuel is. We said earlier on that there is actually a subsidy, some countries, it is only now that they are removing some taxes and so on, we have since removed the taxes for some time. So there is a subsidy on the fuel. Can we do more? I am afraid we cannot!” Dr Musokotwane said.

“The reason is simple, this subsidy on the fuel means that if we reintroduce it, then it has to compete with other subsidies that government has already provided. We do provide subsidies on fertiliser, but on top of that, government has provided subsidies on education, secondary school education, primary school education is totally free. On top of that we have provided subsidies for boarding fees. So clearly, if we have to reintroduce subsidies of fuel, it means we have reduced subsidies on fertiliser, it means we have to reduce the subsidies on education in particular. Now, this government has taken the view that education is so paramount. I am afraid we have to let it be that way so that our children can go to school, and women can have access to clinics in shorter distances. Education is the biggest equalizer in the fight against poverty. So I am afraid there will be no subsidy on fuel beyond the removal of the taxes.”

And when asked which creditor country was delaying Zambia’s debt restructuring as eluded to by the United Kingdom Minister for Africa Vicky Ford, Dr Musokotwane said he couldn’t reveal the name because the matter was a diplomatic issue.

“I am afraid I cannot release that because there are diplomatic issues that we are following. So mentioning the name obviously does not help. How much are we going to borrow from the IMF if the programme goes through as we expected? It will be $1.4 billion, what is it for? Partly, to increase the levels of reserves, but partly also for spending. Remember we are in a debt crisis, so we need concessional financing to be able to deal with some of the critical social issues, issues of education, issues of health, issues of water. Given our indebtedness, we cannot deal with those critical issues out of our own budget. So it makes sense to borrow some money for this particular account so that we can deal with the most critical social issues, because it is cheap money,” he said.

He said the country’s economic performance in the first quarter had shown progress made in the reformation programme.

“Growth is expected to remain on a positive trajectory in 2022 and the medium term premised on a continued pick-up in economic activity and high copper prices. The agriculture, mining, tourism, manufacturing and Information and communications sectors are expected to drive the growth. The economic outlook is uncertain due to the ongoing Ukraine conflict and the lingering COVID-19 Pandemic. We have already seen an increase in oil and fertilizer prices due to supply chain disruptions. The effect on the Zambian economy has been an increase in fuel pump prices. This in turn will pose challenges in meeting our inflation and growth targets. We will, therefore, continue to monitor global risks closely and work to mitigate these risks to the greatest extent possible,” said Dr Musokotwane.

“The picture from the first quarter clearly shows that some progress has been made from some areas of our reform programme. The objective of the government will be to sustain and improve where progress has been made and to resolve any challenges and bottlenecks hindering progress.”

Meanwhile, Kapala said CEC had signed a new bulk supply agreement with Zesco which was subject to be verified by the Attorney General and ERB.

“CEC Bulk supply agreement, this has been also a topic that most Zambians have been concerned, where by they thought that Zesco had received a raw deal from the previous bulk agreement. There has been negotiations and a deal agreement was done yesterday, though this agreement is subject to be verified by the Energy Regulation Board as well as the Attorney General to ensure that all legal processes are complied with,” he said.

He said government was slowly dismantling the $700 million debt owed to Oil Marketing Companies.

“A lot of people have been asking what has happened to the $700 million debt, government has been dismantling this debt slowly. Because of the financial constraints that we have found ourselves in, we hope that by the removal of all the waivers and subsidies, we should be able to settle this outstanding $700 million that is owed to the OMCs,” said Kapala.

“Though government is going to move away from involvement in the procurement of petroleum products, government has got plans at which we have already started working on, that we should get involved in arranging for bulk purchases of petroleum products, government to government initiative, so that we will be able to monitor or at least work out transportation and pump price, so that the oil marketing companies do not overcharge. This will help the people of Zambia at least to get reasonable pricing on fuel products.”