Stiff penal­ties for er­rant fuel firms

The Herald (Zimbabwe) - - Front Page - Her­ald Reporter

OWN­ERS of oil com­pa­nies and ser­vice sta­tions that cheat in buy­ing or sell­ing fuel face heavy penal­ties un­der new reg­u­la­tions gazetted at the week­end which also show that al­most all the fuel price in­crease is ac­counted for by a five-fold rise in du­ties rather than al­low­ing par­al­lel pric­ing. Those caught cheat­ing risk fines and five-year jail terms.

The pack­age of fis­cal and reg­u­la­tory mea­sures an­nounced by Pres­i­dent Mnan­gagwa on Satur­day was cap­tured in two statu­tory in­stru­ments pub­lished in an Ex­tra­or­di­nary Gov­ern­ment Gazette dated the same day: The Pe­tro­leum (Pe­tro­leum Prod­ucts Pric­ing) Reg­u­la­tions, 2019, made by En­ergy and Power Devel­op­ment Min­is­ter Jo­ram Gumbo and the Cus­toms and Ex­cise (Tar­iff) (Amend­ment) No­tice, 2019 (No. 7) made by Fi­nance and Eco­nomic Devel­op­ment Min­is­ter Prof Mthuli Ncube.

The Cus­toms and Ex­cise No­tice raises the duty on petrol from 45c/ litre to $2,31/litre and the duty on all diesel and paraf­fin from 40c/litre to $2,05/litre. These fis­cal mea­sures ac­count for more than 90 per­cent of the rise in re­tail prices for fu­els and were de­signed to counter eco­nomic and mar­ket forces that en­cour­aged wide­spread cheat­ing that saw Zim­babwe’s con­sump­tion of petrol and diesel nearly dou­bling from June last year with­out ex­pla­na­tion.

That cheat­ing could have cost the coun­try more than $250 mil­lion in scarce for­eign ex­change.

The new re­tail prices of $3,31/litre for petrol and $3,11/litre for diesel keep the 1-1 ra­tio be­tween RTGS pay­ments and for­eign cur­rency, with the Re­serve Bank of Zim­babwe con­tin­u­ing to al­lo­cate forex for fuel pro­cure­ment.

It was also an­nounced at the week­end that US$20 mil­lion had been al­lo­cated to buy 44 mil­lion

litres of fuel. Yes­ter­day there was heavy tanker traf­fic from the Msasa de­pot and many fuel sta­tions got de­liv­er­ies.

The Pres­i­dent also an­nounced on Satur­day that “all reg­is­tered busi­ness en­ti­ties in man­u­fac­tur­ing, min­ing, com­merce, agri­cul­ture and trans­port sec­tors” will be granted tax re­bates, mak­ing it pos­si­ble for them to con­tinue sup­ply­ing goods at the old price and not hav­ing to fac­tor in higher fuel bills when cal­cu­lat­ing costs. The re­bates are pos­si­ble be­cause the bulk of the new prices are made up of taxes.

Un­der the Pe­tro­leum Reg­u­la­tions, the Zim­babwe En­ergy Reg­u­la­tory Author­ity (Zera) will set petrol and diesel prices weekly in terms of set

for­mu­las. Un­der the for­mula for each fuel, the start­ing point is the FOB price. This is the ac­tual for­eign cur­rency cost to Zim­babwe and is set as the av­er­age of the pur­chase price in the third and fourth weeks be­fore the week the price is set.

On top of the FOB price is the pipe­line charge to Msasa, 10,5c a litre. Taxes and levies ab­sorb an­other $2,482/litre for petrol or blend and $2.11/litre for petrol. Most of this is the new du­ties along with charges for the Zi­nara road levy, car­bon tax, debt re­demp­tion and the Strate­gic Re­serve Levy. Ad­min­is­tra­tive costs take an­other 3,1c/litre to give the landed cost at Msasa.

Dis­tri­bu­tion costs add an­other 8,8c a litre for both fu­els (this cov­ers the road tanker costs). Profit mar­gins are 10c/litre for oil com­pa­nies and 15c/litre for ser­vice sta­tions to give the fi­nal pump price. Ser­vice sta­tions and other li­censed sell­ers out­side the main de­pots can work ad­di­tional trans­port costs depend­ing on dis­tance up to a max­i­mum of 7,95c/ litre and that is only on dis­tances over 1 00km from a main de­pot.

The reg­u­la­tions in­crease penal­ties for cheat­ing.

Any­one sell­ing pe­tro­leum prod­ucts above the rec­om­mended whole­sale or re­tail price can be jailed for five years or fined at level nine, or be fined and jailed, and all pe­tro­leum prod­ucts would be for­feited to the State.

Un­der the reg­u­la­tions, Zera must close down any re­tailer im­me­di­ately pend­ing pros­e­cu­tion, at least as far as fuel sales are con­cerned. That means a cheat­ing ser­vice sta­tion owner can­not stay in the main busi­ness while on bail await­ing trial.

Iden­ti­cal penal­ties for com­pul­sory clo­sure ap­ply to any re­tailer or ser­vice sta­tion that fails to dis­play the pre­scribed prices in a prom­i­nent place and on each fuel pump.

In­ves­ti­ga­tions re­vealed last night that a level nine fine is $600, but it was noted that a ser­vice sta­tion that over­charged 200 cus­tomers in a sales ses­sion could then be fined that for each of­fence, for a to­tal of $120 000 for a day’s cheat­ing.

All re­tail­ers and ser­vice sta­tions are re­quired to is­sue re­ceipts on re­quest show­ing the price of the pe­tro­leum prod­uct, the quan­tity and the to­tal sales charge.

Any­one re­fus­ing to is­sue the re­ceipt can be fined at level five or jailed for two years. Level five fines were as­cer­tained last night at $200 an of­fence. Such re­ceipts would give proof of price cheat­ing.

The reg­u­la­tions now make it an of­fence to with­hold pe­tro­leum prod­ucts or­di­nar­ily meant for sale with­out good rea­son.

“Any per­son who with­holds any pe­tro­leum prod­uct shall be guilty of an of­fence and shall be li­able to pay a fine of up to level nine or im­pris­on­ment for a pe­riod not ex­ceed­ing five years or both such fine and such im­pris­on­ment.”

This reg­u­la­tion crim­i­nalises a ten­dency by ser­vice sta­tions to hoard fuel.

Pres­i­dent Mnan­gagwa, Min­is­ter of Lands, Agri­cul­ture, Wa­ter, Cli­mate and Ru­ral Re­set­tle­ment Per­rance Shiri (left) and Adoro Tech gen­eral man­ager Mr Bless­ing Mwanyali (right) in­spect some of the trac­tors and com­bine har­vesters man­u­fac­tured in Rus­sia dur­ing an ex­hi­bi­tion at Gwebi Col­lege of Agri­cul­ture on Satur­day. — Pic­ture by John Man­zongo

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