USAID Zambia proposes eliminating taxes on LPG cylinder, stoves amid electricity crisis

As the 2025 national budget submissions continue, the United States Agency for International Development (USAID) Zambia has proposed that the government consider removing taxes on Liquefied Petroleum Gas (LPG) cylinders and stoves.

Additionally, USAID Zambia suggested that the government eliminate the 60 percent excise duty and 16 percent Value Added Tax (VAT) on denatured ethanol for cooking. These proposals are in response to the current energy crisis Zambia is facing.

The submissions were made by Catherine Tembo, Acting Office Director of the USAID Zambia Economic Development and Environment Office, during the 2025 national budget stakeholder submissions.

Tembo explained that these measures aim to transition from charcoal usage.

She pointed out that Zambia had the potential to produce about 240 million liters of ethanol annually from sugarcane molasses and cassava.

She noted that removing market constraints for LPG and denatured ethanol could create sustainable jobs, increase government revenue, attract investments, and reduce charcoal usage and deforestation from charcoal production.

“While the denatured ethanol supply chain does not currently exist in Zambia, between imports, pending foreign investments, and domestic production, a robust supply chain could be developed in about three to four years.

“However, recognizing the urgency of initiating Zambians’ transition away from charcoal, we would encourage the government to remove the remaining 16 percent VAT on LPG cylinders and associated stoves.

As the supply chain and distribution network for LPG already exists, this alternative cooking fuel has the greatest potential for immediate-term adoption in the country,” Tembo said.

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