Fuel smuggling in Zimbabwe spirals out of control

Zimbabwe’s energy regulator will go ahead with plans to introduce mandatory fuel marking which it says will curb rampant fuel smuggling which is prejudicing the country of an estimated $1 billion annually in unpaid taxes.

The programme was set to start in January this year but with no legal framework support, it will now take off at the beginning of next year.

According to the Zimbabwe National Statistics (Zimstat) the country imports 1.5 billion litres of  fuel and lubricants at an estimated cost of $1.3 billion annually but Zimbabwe Revenue Authority chairperson, Willia Bonyongwe suggested recently that the cost of smuggled fuel was much more, costing the State over $1 billion in undeclared levies.

A recent survey analysing fuel usage and consumption patterns in Zimbabwe by an independent research firm Authentix noted that based on official fuel consumption and vehicle ownership statistics, Zimbabwe’s vehicle to fuel ratio was nearly five-fold below that of neighbouring countries.

The research shows that an individual vehicle in Zimbabwe uses an average of 801 litres per year while neighbouring countries like Namibia, Mozambique, Zambia, Tanzania and Botswana have consumptions levels of 4 660 litres, 4 832 litres , 3 537 litres, 3 519 litres and 3 537 litres per vehicle respectively.

This suggests that fuel imports into the southern African country are massively under declared.

“This significant difference cannot, in our view, be explained by variations in topography, road conditions, or driver behaviour. Based on this analysis of the data, illicit untaxed fuel is entering the market to service consumers who, knowingly or otherwise, are prepared to purchase such fuel,” reads the report.

“Given the significant price differential between fuel retail prices in the neighbouring countries, the strong suspicion is that the lower cost or transit fuel is being illicitly sourced and sold untaxed within Zimbabwe, undermining the Government’s collection of excise tax and VAT revenues. Based on average vehicle fuel consumption volumes in the comparative neighboring countries, this report concludes that significant excise tax and VAT revenues are lost to Zimbabwe”.

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