Petrol price fall likely as ethanol production resumes

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    Martin Kadzere
    Zimbabwe’s petrol prices are expected to ease marginally as the country records improved supplies of ethanol after the sole producer, Green Fuel, resumed operations at its plant in eastern Zimbabwe.

    Ethanol supplies dried up after Green Fuel, the largest local ethanol producer, shut down the plant for a scheduled annual maintenance but failed to restart on time.

    Zimbabwe has a mandatory blending ratio of 20 percent, but fluctuates from time to time depending on supply.

    Some fuel retailers had raised prices by as much as 10c per litre arguing they were selling expensive 100 percent unleaded petrol.

    Rising oil prices, which closed at $80 per barrel yesterday, the highest since November 2014, on the back of constrained supplies and growing demand, also compounded the problem.

    Green Fuel normally builds up stocks to carry it through during maintenance period, but the unusual late rains affected its capacity to produce enough quantities to meet demand.

    “We were in the process of restarting the plant and production resumed today,” the spokesperson of Green Fuel Derick Elliot told Business Weekly by telephone on Wednesday.

    “We have advised the Ministry (of Energy and Power Development) to go to 20 percent blending and this should bring down the petrol prices by between 4c and 6 cents.”

    In Zimbabwe the maximum fuel prices are determined using the fuel pricing template as provided in Statutory Instrument 80 of 2014 – Petroleum (Fuel Pricing) Regulations, but final fuel prices are the maximum prices operators could charge in the applicable weeks.

    Operators can however charge lower prices depending on their market advantages or desire to attract customers.

    Green Fuel, a joint venture between Ratings Investments and state-owned Agriculture and Rural Development Authority (ARDA) expects to increase production to 70 million litres this year from 54 million litres and up to 90 million litres next year.

    Output will be driven by expansion of sugarcane production, a key raw material for ethanol and the plant upgrade. This would help the company to stock enough reserves and maintain supplies during future shut downs or unexpected stoppages.

    In the past few days, there have been long queues at many fuel service stations as demand for the commodity increased due to an upsurge in the economic activity, the Minister of Energy and Power Development Simon Khaya Moyo said in a statement on Wednesday. The minister said Zimbabwe as a price taker, had experienced fuel price fluctuations in line with global oil prices.

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