Future fuel levy reductions may affect MVA

Declining volumes of consumed fuel a concern
In an audit report, the MVA said any prolonged reductions to fuel levies would harm its ability to operate as a going concern.
Ogone Tlhage
The Motor Vehicle Accident (MVA) fund of Namibia says any proposed future adjustments to fuel levies may erode its revenue stream and affect its operations.

The MVA is funded by a levy on every litre of fuel sold every time a driver or owner of a motor vehicle puts fuel in their car, making them automatic stakeholders of the fuel levy system.

In an audit report, the fund said any prolonged reductions to fuel levies would harm its ability to operate as a going concern.

Drops

This follows adjustments to various fuel levies introduced for the months of May, June and July earlier this year to ease the burden on the travelling public.

Cabinet approved the ministry of mines’ recommendation to temporarily reduce levies imposed on fuel for all products. The recommendation resulted in a 25% reduction in the MVA fund levy, with the levy collected dropping from 50.3 cents to 37 cents.

Other reductions include a decrease in road user charges from 148 cents per litre to 74 cents per litre; the fuel levy from 90 cents per litre to 45 cents per litre and the National Petroleum Corporation of Namibia levy from 7.6 cents per litre to 3.8 cents per litre.

Going concern

"The fund continues to engage the relevant ministries and other stakeholders to ensure that the fuel reductions do not remain in force for a prolonged period and pose a risk to the fund’s going concern," the fund said.

The reduction in fuel levies also placed pressure on the fund to realign its spending going into 2023, it said.

"To ensure the fund continues to deliver on its mandate while remaining sustainable for the foreseeable future, the fund will restructure the implementation of its strategic plan for the 2023 financial year."

A decline in fuel volumes marketed was another notable concern for the fund, as it depressed revenues.

"Fuel volumes consumed have been on a declining trend over the past few years, owing to ever-increasing fuel pump prices as impacted by increases in Brent crude oil prices. The 25% reduction in fuel levies will therefore exacerbate the already depressed revenues," the fund said.