THE National Oil Company of Zimbabwe (Noczim) is reportedly putting pressure on government to review the Noczim debt redemption levy it charges to privat
e fuel companies to allow it to increase its waning revenues.
Private petroleum companies are paying about $1 for every litre purchased from Noczim or imported as levy. Noczim, which has been battered by a massive debt is arguing that the review is necessary to help it pay its foreign debt and monthly obligations to the Bulawayo-Beitbridge Railway (BBR) for using the railway line.
It is understood that the government had initially offered to increase the levy to $25 per litre but sources this week said Noczim was pushing for a much higher increase.
The Noczim debt redemption levy was introduced by the Finance Act in 2003 to assist the company amortise its accumulated foreign debt that it has battled to settle despite previously enjoying monopoly over fuel trade.
If effected, the higher levy would precipitate fuel prices hikes in Zimbabwe as petroleum companies would pass on the burden to end-users. This means that people will have to pay more for the fuel that they get through the official market.
There are indications that next year’s budget scheduled for the end of November will announce an increase in fuel prices. Private players sell fuel at $1 600 per litre when Noczim’s products are sold at $335 per litre as the company receives hefty government subsidies.
Government this week gave Noczim chief executive officer Zvinechimwe Churu the greenlight to work on the computations for consideration before the 2007 budget is crafted.
Noczim is paying US$1,3 million in service charges per month (about $267 million) to BBR and intends to use private players’ contributions to help it settle its own debts.
Most private players import fuel using road tankers.
Churu said despite paying the high fees to BBR it was collecting less than $100 million per month through the levy.
He demanded that whenever petroleum companies hiked prices, the levy should be adjusted and as exchange rates fluctuated, there should be corresponding upward adjustments.
“We have accrued forex obligations in the national interest. Noczim must be assisted to liquidate the debts by increasing the levy to enable them to pay BBR. We rarely use that line,” Churu told a pre-2007 budget seminar in Harare on Tuesday.
Petroleum companies told businessdigest this week that Noczim’s plans would cause viability problems as companies were already paying uneconomical amounts in levies to compensate for Noczim’s mismanagement.