PLAYERS in the energy sector have called on authorities to scrap off duty for the importation of liquefied petroleum gas (LPG) and equipment to ensure a reasonable pricing model on the local market.
This comes as gas prices recently increased with some outlets selling the product for up to US$2,60 per kilogramme, amid shortages in the market.
With most households in Zimbabwe now relying on LPG for cooking, stakeholders in the sector are hoping for a reprieve on duty from the Zimbabwe Energy Regulatory Authority (Zera).
“In light of current high LPG prices, Zera should with immediate effect regulate the price of LPG as it is under its scope like petrol and diesel and protect consumers.
“Zera should liaise with the ministry of Finance to ensure reasonable flat rate or scrapping of duty on LPG equipment like digital scales, pumps, cylinders (domestic and bulk), piping and ancillary connection equipment,” the players said in a January 25 letter to Zera.
The players said there was a need to standardise the LPG pricing model, adding that Zera should review its licensing process and ensure all the dealers are documented.
“Wholesaling and importing should have separate licences. This would bring sanity to the sector as wholesalers will deal only with licensed retailers…and importers will deal with licensed wholesalers.
“Wholesale operations should be area specific, preferably provincial and the number should be restricted to ensure quality…while import licence can be national without geographic limitations, separated from wholesaling which should be a pure domestic activity,” they said, adding that trade between importers and wholesalers should be allowed to mitigate provincial short supply of the product.
According to the players, currently, importers determine LPG price and also create situations for the short supply of the product, resulting in an increase in wholesale prices, while “some importers are selling to unregistered dealers who pass on the high cost to consumers at no fiscal benefit to the Zimbabwe Revenue Authority (Zimra) and local authorities”.
They further said there was need to create a three-tier market system comprising importers, wholesalers and retail, all answerable to Zera.
“This scenario creates more employment, scarce forex resources are accounted for through the banking system for importers and a collective voice is achieved to other stakeholders like the Reserve Bank of Zimbabwe, National Social Security Authority, National Employment Council and Zimra can work out real needs of the industry.
“It should be noted that LPG import licence should be issued on real joint venture paperwork of the importer and LPG supplier as a condition for license issue so as to cut out middlemen of wholesalers in the export country who pose as importers, currently the scenario.
“LPG should be procured at source. The import licence should have maximum refinery gate price guarantee before mark-up, duties and transport charges. The more supply there is, prices fall as wholesalers compete for licensed retailers and markets.”