eBusiness Weekly
Hebert Zharare
Despite statutory levies as high as 71 percent on major petroleum products, the country’s energy regulator contends fuel prices in Zimbabwe are consistent with the architecture of the domestic market. Government levies 42,1 cents per litre for petrol and 62,2 cents for diesel with the Zimbabwe Energy Regulation Authority (ZERA) maintaining the commodity is fairly priced given circumstances obtaining on the market. Zimbabwean motorists pay $1,28 per litre for diesel 50 and up to $1,46 for petrol per litre.
Over and above Government the statutory levies, fuel dealers also charge varying margins per litre of fuel for transport from ports and a mark-up for profit. These levies and charges make Zimbabwean fuel one of the most expensive in the region. However, in e-mailed responses on Wednesday ZERA finance and administrative director Eddington Mazambani, said most landlocked countries, Zimbabwe included were price takers, adding it was unjustifiable to make comparisons among nations.
Motorists and industry are on record saying they were overburdened by high fuel prices steeped by a significant element of cost from levies to raise money to repay $200 million legacy debt that accrued due to poor corporate governance matters at former National Oil Company of Zimbabwe and a long period when Zimbabwean fuel was cheapest in the region. Although Mazambani declined to comment on the effect legacy debts referring the matter to the Ministry of Energy and Power Development, he admitted there were a number taxes on commodity.
“Total duties, levies and taxes are 46,1 cents and 62,2 cents per litre for petrol and diesel respectively. All the countries in the region are price takers in terms of the price of fuel from the different refineries. The final prices of fuels in the different countries are based on a number of factors and the following are some of the reasons: Taxation — This varies from country to country based on the Government’s fiscal plans. Subsidies — in some countries, governments subsidize the cost of fuel to the final consumers. Geographic location — The distance from the ports has an impact on the cost of fuel, Zimbabwe is landlocked therefore it is exposed to additional logistical costs.
“When making a comparison of fuel prices, it is necessary to analyse all these factors. Generally, fuel prices in all the countries have been going up between July and December 2017.
It is also important to point out that some countries in the region operate refineries with by-products helping to reduce the final price of petroleum products to the market,” said Mazambani. The price of up to $1,46 per litre appears outrageous for many motorists who feel short-changed by the fuel dealers given some motorists in jurisdictions far afield from seaport cities, pay far less. In countries with sea ports such as Mozambique, motorists pay 80 cents per litre while in landlocked countries such as Botswana, fuel fetches 90 cents at the pump.
Zimbabwe blends its fuel at a ratio of between 10 and 20 percent ethanol and unleaded petrol, a move many motorists thought would bring massive relief as far as the price of the commodity is concerned. However, ZERA argues the costs involved in the processing of the ethanol made it difficult for motorists to enjoy lower prices.
“It is necessary to point out that the ethanol that is used for blending has its own cost — it is not a free input. Higher blending ratios reduce the final fuel costs than lower blending ratios.
“The pipeline provides least cost transportation option for moving fuel from the port to Zimbabwe. Alternative options include road and rail and these are about double the price of using the pipeline to transport fuel,” he said.
There has been concern among some stakeholders that the use of multi-currencies, mainly the US dollar made petroleum products expensive compared prices to other countries in the region.
