Zambia extends fuel subsidy for another 3 months

LUSAKA, Zambia

Zambia announced a fuel subsidy extension for another quarter Thursday as the government sought to cushion the country from high gas prices attributed to the Russia, Ukraine war.

Energy Minister Peter Kapala said the government will extend and maintain current subsidies on petroleum products until September 30.

“Value added tax and import duty will remain waived on diesel and petrol, while excise duty is waived on diesel and reduced on petrol. There is no tax regime on kerosene,” he said.

Africa’s second-largest copper producer has in the first half of 2022 grappled with intermittent gas price adjustments, mostly upwards, because of tensions between Ukraine and Russia.

Fuel and diesel prices are now more than $1 per liter and with the war in Ukraine, prices are expected to reach new heights this month or the next.

“These challenging global market conditions have left the Zambian government with no other option but to adjust fuel prices to match international prices. However, the government has had to come in and cushion what would be a dire situation had we totally removed the subsidies as originally planned before the Ukraine war started,” added Kapala.

He said the current subsidy program would cushion motorists from the shock of what would be higher prices of petroleum products albeit amidst massive losses to the Treasury in lost taxes.

Kapala said the decision would be reviewed at the end of the quarter to weigh its sustainability.