eBusiness Weekly
Africa Moyo
Debate over the cause of high fuel prices in Zimbabwe has refused to die down. Motorists claim they are paying way more than their regional counterparts.
Currently, local petrol prices are hovering between $1,35c and $1,38c depending on the fuel retailer while in several regional countries, petrol prices are averaging 95c.
This comes at a time when expectations were high that fuel prices would come down following the introduction of fuel blending in 2013.
Government started fuel blending at the ratio of 5 percent ethanol and 95 percent unleaded petrol.
The ratios were eventually increased to 20 percent, which is currently obtaining.
When the idea of blending was introduced, it was hoped that at a blend rate of 20 percent — which is commonly referred to as E20 — Zimbabwe would save about $3,8 million per month.
Critically, the use of blended fuel was also expected to slash greenhouse gas emissions by as much as 90 percent.
However, despite all the alleged benefits associated the use of ethanol blends, local motorists and industrialists feel they are being cheated as prices have remained high.
There are suggestions that Government taxes and levies on fuel add about 58 cents on the overall petrol prices and approximately 44 cents on diesel.
Some of the taxes are; excise duty (which was recently reduced); carbon tax (13c per litre for diesel and 4c per litre for petrol); Zinara road levy (6c per litre for both petrol and diesel) and debt redemption levy (0,013c and 0,07c per litre for diesel and petrol).
However, fuel industry experts say beyond the Government taxes, local fuel prices are also high because of obtaining ethanol prices.
Zimbabwe gets ethanol Chisumbanje and Triangle at 88c and 99c per litre respectively.
Business Weekly could not obtain ethanol price movements since 2013 to establish if they have a major say in overall fuel prices in the country, as Zimbabwe Energy Regulatory Authority (Zera) communications officer Gerald Njanji said they were still being worked on.
Zera CEO Engineer Gloria Magombo told the Parliamentary Portfolio Committee on Energy recently that ethanol prices from Chisumbanje and Triangle were higher than what comes from Brazil.
“It is true that Chisumbanje and Triangle are now producing ethanol, and the price of ethanol from Triangle is 88 cents per litre while that from Chisumbanje is 99 cents per litre, and the price of ethanol from Brazil is cheaper at 60 cents to 65 cents per litre.
“However, to import fuel will not make economic sense to the country because the free on board (FOB) price of ethanol and petrol is 60 cents,” said Eng Magombo.
The high ethanol prices, combined with several Government taxes, have seen fuel prices fairly high in the country compared to regional countries.
In Zimbabwe, fuel prices are determined in line with Statutory Instrument (SI) 80 of 2014 as read together with the subsequent amendments including SI 20 and 100 of 2015.
Zera sets the maximum free on board (FOB) prices for the different fuels but due to competition, operators may decide to sell at prices below the cap depending on their trading advantages.
SI 80 of 2014 says the selling price by a petroleum company on any petroleum product shall not exceed oil company purchase price plus 7 percent of the oil company purchase price.
It adds that the fuel price should also be a minimum of 6c for every litre or a maximum of 7 percent of the oil company’s selling price, in the case of the retail oil.
