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Reform fuel procurement system- PMRC

• Government is urged to reform taxes that govern petroleum procurement system.
• The long-term solution for the petroleum sector in Zambia is to liberalize it.
• OMCs/ private sector need to be responsible for the procurement of petroleum.

Policy Monitoring and Research Centre (PMRC) has advised government to revisit and reform the controls and taxes that govern the petroleum procurement system.
Organization Executive Director Bernadette Zulu tells Money FM News that this is to allow greater competition in the market, which may ultimately eliminate any expensive procurement procedures, as the long-term solution for the petroleum sector in Zambia is to liberalize it.
Ms. Zulu suggests that Oil Marketing Companies (OMCs) or the private sector must be responsible for the procurement of the country’s fuel needs.
“This may reduce the financial burden on the Treasury and possibly free up resources to other sectors,” Ms. Zulu said.
Government further urged to stiffen measures to ensure that there is uninterrupted flow of petroleum products into the country to guarantee supply and ensure stable and predictable prices.
Meanwhile, Ms. Zulu described the introduction of Value Added Tax (VAT) Zero-Rating by Government as a move in the positive direction.
She noted that the idea behind the amendment was to lower the price of petrol and diesel for ease accessibility by the people.
“In this case, consumers are able to purchase fuel at a cheaper rate that will eventually increase the demand for fuel enabling suppliers to continuously stock fuel in their depots.”
“However, the move by the Government will tend to reduce the Zambia Revenue Authority (ZRA) tax revenue base,” she observed.
She emphasized the need for Government to consider other measures that will stabilize the ZRA revenue collection and not further tighten the fiscal space.

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