New fuel tax introduced
Brian Benza | Friday June 30, 2017 19:00
Minerals Resources, Green Technology and Energy Security minister, Sadique Kebonang said Cabinet has approved the fuel levy, which will kick in on July 1, 2017. The new tax will be in addition to the current fuel levy of 13.5 thebe per litre. Botswana consumes about 1.2 billion litres of petroleum products per annum.
This means the new tax could raise as much as P200 million per annum. Botswana Oil chief executive officer, Willie Mokgatlhe told BusinessWeek that the new tax might not immediately lead to an increase in fuel pump prices as the National Petroleum Fund (NPF) might be able to cushion the effect of the tax in the short term.
“A lot will depend on how much buffer is there in the National Petroleum fund, if they can cushion the increase then the Department of Energy might not raise pump prices,” he said.
The NPF is a statutory buffer providing subsidised pump prices to consumers usually in periods of high international oil prices as it pays retailers the difference between the administered prices and the prevailing market price of fuel.
Apart from stabilising retail pump prices for controlled petroleum products, the Petroleum Fund is also used to purchase petroleum product stocks for the government’s strategic oil storage facilities.
The Fund is also meant to meet insurance premiums in respect of the insurance of government’s strategic oil storage facilities and stocks. The Fund also collects a levy rate of 13.5 thebe per litre from the sale of both petrol and diesel grades on a monthly basis, as well as payments through over-recoveries.
According to Mokgatlhe, the new Petroleum Supply Security levy will now be used to purchase stock for Botswana Oil while also raising funds for the construction of storage facilities.
Botswana has a number of projects currently underway, which include the construction of a new government strategy storage facility at Tshele Hills with a storage capacity of 180 million litres at a cost of about P1.2 billion. Works have also started on the expansion of the existing Francistown bulk fuel storage depot by 60 million litres, a project that is estimated to cost about P600 million.
Plans are also afoot to construct of a new 30 million litres storage facility in Gantsi to cater for supplies through the route to serve the North Western part of the country. Botswana Oil is also considering securing coastal storage facilities in Mozambique and South Africa.
“In the interim, Botswana Oil has stored petroleum products in Matola, Mozambique as part of security of supply and the development of alternative routes and source.”