Government abuses fuel levy to fund command agriculture

Source: Government abuses fuel levy to fund command agriculture | The Financial Gazette June 29, 2017

GOVERNMENT has admitted it diverted cash from the NocZim debt redemption fund to pay off loans contracted under its command agriculture programme.

The NocZim debt levy, introduced in 2003 to clear the now disbanded parastatal’s debt mostly owed to foreign fuel suppliers, 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 neither responded to queries about how much the levy has raised since 2009, nor revealed the current level of the debt.
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.

Finance and Economic Development Minister, Patrick Chinamasa disclosed in a statement this week 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 allows Treasury to vary its use, the continued diversion of funds away from servicing the NocZim debt has extended the amortisation period, maintaining high fuel prices that contribute to Zimbabwe’s overall high business costs.

Last year, the Auditor General reported that the NocZim debt levy was being used to settle a $67 million loan for unspecified “government operations,” with monthly payments of $2,7 million being made from the fund.

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.