An Energy Expert has cautioned that while Government’s decision to extend fuel tax relief measures offers immediate relief to households and businesses, the move could create long-term fiscal pressures if not accompanied by structural reforms in the energy sector.
Government has extended the temporary suspension of excise duty on petrol and diesel, alongside the zero-rating of Value Added Tax (VAT) on the two fuel products, for an additional 90 days until September 30, 2026, in a move aimed at cushioning citizens and businesses against rising fuel costs.
Engineer Bornface Zulu told Money News in an interview that maintaining the tax measures over a prolonged period could have significant implications for Government revenue.
“Revenue loss is estimated at about K1.3 billion per month, totaling K11.97 billion annually if extended,” he stated.
Eng. Zulu further noted that reduced revenue could limit Government spending on key sectors such as health, education and infrastructure development.
He said the current measures were only temporary and did not address Zambia’s underlying exposure to international oil market volatility. “Relief is short-term; Zambia remains vulnerable to global oil volatility,” he said.
Eng. Zulu also raised concerns that transport operators may not fully pass on fuel cost reductions to commuters, limiting the intended impact on consumers.
He however observed that the move would help shield citizens from the effects of global oil price fluctuations, by lowering fuel costs and easing pressure on transport expenses and household budgets.
Eng. Zulu added that the intervention would help reduce costs across key sectors of the economy. “It directly lowers pump prices, easing transport fares, stabilizing food costs, and supporting industries,” Eng. Zulu stressed.
He said the latest fuel prices stand at K26.15 per litre for petrol, K28.11 for diesel, K28.32 for kerosene and K30.27 for Jet A-1 fuel, adding that lower fuel costs could improve business competitiveness and provide an inflation cushion.
The Energy Expert stressed that small and medium enterprises, agriculture and the mining sector were among industries likely to benefit from reduced operational expenses.
To address longer-term challenges, he called for targeted subsidies focused on sectors such as public transport and agriculture rather than broad tax waivers.
Eng. Zulu also urged accelerated investment in alternative energy sources and electric mobility solutions. “Zambia must use this window to pivot boldly toward renewable energy and electric mobility, ensuring that future relief does not drain public finances,” he emphasized.
