The Sunday News
Rumbidzai Mbewe
SURVEILLANCE by the Zimbabwe Energy Regulatory Authority (ZERA) has shown that fuel prices in the country have been reduced after experiencing significant price increases in the months of August and September as a result of an additional five cents per litre duty introduced by the Government.
ZERA chief executive officer Engineer Gloria Magombo said the price of fuel had gone down as of this month compared to November this year. She said ZERA monitored the country’s fuel prices on a weekly basis through its price surveillance mechanism.
“The blend prices were as high as $1,56 per litre while diesel was around $1,48 per litre at the beginning of November 2014. However, a decline in blend prices has been recorded as of December 2014 to between $1,49 per litre and $1,53 per litre. Diesel prices have also reduced from around $1,44 per litre to between $1,38 per litre and $1,41 per litre in the same period,” she said.
Engineer Magombo said it should be noted that although the local fuel was blended, ethanol for blending was pegged at $1 per litre including five cents per litre which is excise duty.
“Tax and duty on fuel are other revenue streams that fund Government programmes and operations hence statutory payments constitute a major component of the fuel costs. These are not the same in every country,” she said.
Engineer Magombo also attributed the fall of fuel prices in the country to the decline of international prices of crude oil in the international market. She, however, said Zimbabwe took longer in reacting to the change in international prices due to the longer transportation of fuel to the retail market.
“The prevailing state of fuel prices in the country is due to the backdrop of falling prices on the international market. Zimbabwe, however, experiences a delay in terms of benefiting from the international fall of fuel prices due to the long period it takes to transport fuel from source to retail.
Other procurers secure 3-6 months fixed price contracts as a way of hedging against price increases,” she said.
The prevailing fuel prices in the country are within the provisions allowed by the Statutory Instrument (SI) 80 of 2014 which provide the framework for the pricing of fuel. The SI 80 of 2014 also sets the maximum margins realisable at wholesale and retail of fuel at seven percent.
“The implementation of SI 80 is such that the pricing slate determines the maximum prices each time. The variable that changes most in the pricing formula is the free on board price which is the price at Beira. The fuel pricing model provides the cost build-ups of fuel prices,” said Eng Magombo.
Fuel prices in Zimbabwe are not too high compared to other countries in the region. Malawi has the highest petrol cost in the region. Petrol costs $1,71 while diesel prices are pegged at $1,71 per litre.
