GOVERNMENT should consider removing fuel subsidies as it aggravates fiscal imbalances and negatively affect priority public spending because an average of US$30 million is spent over a short period of time, says Energy Forum Zambia chairperson Johnstone Chikwanda.
He said the Energy Forum Zambia had consistently fought for the elimination of fuel subsidies because not only did they aggravate fiscal imbalances but also depressed private investment and distorted resource allocation.
He said although fuel and electricity subsidies appeared to be good, they in actual sense benefited a narrow section of population and benefited people already well off when compared with the majority who had little or no access to energy products.
“Our argument has been that subsidies although they appear to be good are very pervasive and have a tendency to impose substantial fiscal and economic costs. Subsidies aggravate fiscal imbalances, negatively affecting priority public spending, depress private investment and distort resource allocation.
“Our estimation is that the Zambian government is currently spending an average of $30 million over a short period of time in fuel subsidy in a bid to support a narrow section of the public including the corporate world,” Mr Chikwanda said.
He said the Energy Forum Zambia was uncomfortable with Government spending millions of dollars in fuel subsidies to cushion a narrow segment of society at the expense of other priority areas such as education and health.
“While we hold that fuel is part of the life blood of the economy, we call upon Government to reconsider its position and abolish or significantly phase out the fuel subsidy so that the savings can be channeled to other pressing areas,” Mr Chikwanda said.
He explained that while Government may be trying to protect the general public, it was in advertently subsiding the corporate world.
He said if Government wished to be shielding a part of fuel consumers from time to time, the Energy Regulation Board (ERB) may wish to consider coming up with a different fuel pricing mechanism that had capacity to limit who benefited from the huge subsidy.
“In the same vein, we call up the ERB to immediately rise to the occasion and announce measures that will assist Government to mitigate the impact of this fuel subsidy on the Treasury.
“By so doing the ERB will be demonstrating its mandate of safe guarding the interests of all stakeholders which include Government and the majority of our people who have little or no access to energy products,” he said.
Mr Chikwanda also challenged beneficiaries to be grateful for the gesture from the Government which they had enjoyed since last year.
He further challenged opponents of subsidy elimination to justify why this kind of money must continue being spent at the expense of other priority areas.