NocZim defaults on debt despite levying motorists

NocZim defaults on debt despite levying motorists
Published: 27 July 2017
ZIMBABWE has defaulted on the National Oil Company (NocZim) debt, incurring nearly $90 million in penalties last year, despite raising an average $40 million annually through a fuel levy introduced to pay off the loans.

Figures contained in Finance and Economic Development Minister Patrick Chinamasa's budget review presented in Parliament last Thursday show that the NocZim debt still stands at $108,8 million, with $87,66 million of that being penalties and $21 million being arrears.

Government introduced a NocZim debt levy in 2003 to clear the now disbanded parastatal's debt mostly owed to foreign fuel suppliers.

The levy is 6,7 cents for petrol and 1,3 cents for diesel per litre, respectively.

The Ministry of Energy and Power Development, which administers the fund, has not responded to queries about how much the levy has raised since 2009.

The levy has, however, raised nearly $200 million since 2013, according to The Financial Gazette's calculations based on official statistics, which also show the debt stood at $158 million in August 2010.

Government has diverted funds raised through the levy, with the auditor general reporting last year that the NocZim debt levy was being used to settle a $67 million loan for unspecified "government operations," through monthly payments of $2,7 million being made from the fund.

Last month, Chinamasa also revealed that the NocZim debt levy had been used to help fund the 'command agriculture' programme.

"We, therefore, agreed to provide security to all farmers under command agriculture in the form of non-tradable Treasury Bills and a small part through the NocZim Debt Redemption Fund," Chinamasa said.

While the debt redemption fund's constitution gives Treasury the discretion to vary its use, the continued diversion of funds away from servicing the NocZim debt has extended the amortisation period, ensuring high fuel prices that contribute to Zimbabwe's overall high business costs.

Scrapping the levy would immediately reduce the country's fuel prices, currently averaging $1,34 for petrol and $1,20 for diesel, per litre.

Overall, government taxes and levies add 63,2 cents and 50,1 cents per litre to petrol and diesel pump prices, respectively.

Zimbabwe's fuel prices are significantly higher than those obtaining in its regional peers. In Botswana, South Africa and Namibia, petrol is retailing at $1,06, $1,19 and $1,08 per litre, respectively, while in Zambia, it is currently selling at $1,10 per litre.

- fingaz
Tags: NocZim,

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