LATEST Zimbabwe Revenue Authority (Zimra) figures show a decline in excise duty which the revenue collector has largely attributed to possible smuggling of fuel. Zimbabwe Independent business reporter Taurai Mangudhla (TM) last week interviewed Zimbabwe Energy Regulatory Authority (Zera) chief executive Gloria Magombo (GM) on the subject and the regulator’s interventions. Below are excerpts:
TM: Zimra recently reported it missed revenue targets for excise duty. This was attributed to a reduction in the volumes of fuel imports due to smuggling. Are you aware of cases of fuel smuggling as Zera and what is the extent of smuggling in terms of volume estimates?
GM: Zimra recently reported it missed revenue targets for excise duty and this can be attributed to a reduction in the volumes of fuel imports. Zimra said diesel volumes fell from 199,97 million litres in Q1 (2015) to 190,14 million litres in Q1 (2016) while petrol volumes also fell from 122,14 million litres to 113,86 million litres over the same period. The fuel imports figures that have been released by Zimra have been noted and Zera is currently engaging Zimra to find out the parameters used to compute these figures. This exercise is necessary to ensure that the figures that are maintained by Zera can be accurately compared to those of Zimra. At this stage, it is difficult to comment on the data. However, at the conclusion of our consultations with Zimra, an official statement will be released.
TM: Are there cases of fuel being smuggled out of the country?
GM: Zera has established that there are increased exports of fuel to the region, especially Zambia where some operational problems have been experienced with their refiners since March 2016 and this trend is expected to continue till August.
TM: As the regulator, have you tried to ascertain how much fuel is being smuggled into the country?
GM: On levels of fuel smuggling being an illegal activity, it is not possible to establish the actual volumes of illegally imported fuel.
TM: What is the impact of fuel smuggling?
GM: Zera condemns fuel smuggling as it distorts the actual statistics on fuel consumption which is key for planning, ensuring order and fair play in the fuel industry. It also creates distortions in pricing products, loss of revenue and possible adulteration of fuel which results in damaging of vehicles. We urge consumers to be vigilant and report such cases to the police and the regulator.
TM: What strategies have you put in place to curb smuggling of fuel?
GM: Zimra is the authority that deals with the processing of fuel imports, exports and fuel in transit at the different ports of entry and exit. As such, Zimra would be best suited to advise on strategies they have adopted to curb fuel smuggling.
TM: What is Zera’s role as the regulator in all this?
GM: Zera is always in the field to identify and close any fuel operations that do not conform to the provisions of the Energy Act and Petroleum Act.
TM: In what areas is smuggling rampant and why?
GM: A number of sites have been closed especially in Mutare where there is significant activity owing to its proximity to the border with Mozambique. Zera will not allow any illegal operation of fuel sites wherever they may be and will continue working with the Zimbabwe Republic Police, local authorities and the Environmental Management Agency to bring order to the petroleum sector.
TM: What strategies are you putting place to ensure that all fuel outlets comply with the law.
GM: There are various other strategies that are currently under consideration which will, among other things, assist in eliminating smuggling and adulteration of fuel in general which have been successful in other countries.
The Ministry of Energy and Power Development is working in collaboration with various stakeholders including Zimra to look into long term strategies such as the introduction of fuel marking and electronic tagging.