PRESIDENT Mnangagwa has directed the Government to enforce domestic remedies, including a reduction of duty on petroleum products, to control the price of fuel which went up last week on account of geopolitical factors caused by the Russia-Ukraine conflict.

These fresh interventions have seen the Government forestalling another price hike.

There has been a sharp increase in local fuel prices in the last fortnight after the international price for a barrel of oil increased to an average of US$130 from about US$95 since the conflict began.

Locally, fuel prices increased twice by a about US$0,30c inside a week, leaving diesel and petrol selling at US$1, 68 and US$1, 67 per litre, respectively.

As such, players in the energy sector have raised alarm over the surge saying the knock-on effect could be harmful to the recovering economy.

In an article in this edition, President Mnangagwa called for calm saying Government has taken measures to shield the economy from the global disruptions.

“We are looking at the whole duty framework to cushion our economy from shocks and pressures from galloping fuel prices,” he said.

“There is no need for panic. I have already directed the Ministry of Energy and Power Development to review and reduce duty and surcharges on fuel so the pump prices of petrol and diesel remain manageable.”

The President said Cabinet will soon deliberate on sustained implementation of the measures.

“We need stability in the fuel market so we minimise imported inflation for price stability in the economy. Cabinet will be seized with this issue in days and weeks ahead.”

As of March last year, Zimbabwe’s total taxes and levies on diesel and petrol amounted to about US$0,30c per litre.

In an engagement with players in the insurance sector on Wednesday last week, Finance and Economic Development Minister Professor Mthuli Ncube said the Government was already in the process of reducing fuel taxes.

“The geopolitical developments pose a risk to our economic recovery. These are what we typically call global spill overs,” he said.

“The channels of transmission of such global spill overs is through the oil price and we have seen the price of local fuel move to US$1, 68 per litre because of that movement of the FOB (Fuel on Board) price, which is a direct translation of the global oil price.

“It’s not easy to come up with risk mitigation measures, but one thing we have done is to lower the taxes on fuel from about 12,7 cents (US) to 8,7 cents (US), and that’s where we are now.”

Prof Ncube said the Government is looking to reduce the taxes further.

“We could lower it further, but it’s difficult to get to zero because we have pressures as Government, such as civil servants’ salaries and so forth,” he said.

“By the way, we have been doing that without you noticing since September (2021).”

Energy and Power Development Deputy Minister Magna Mudyiwa yesterday told The Sunday Mail that her ministry has heeded the President’s call.

“It’s true that our fuel prices are among the highest, especially in the region due to some domestic taxes and duty. The reduction of these (duty, tax and surcharges) will definitely see our fuel prices significantly going down.

“We will be reviewing the situation and provide further information in due course.”

In a statement yesterday, the Zimbabwe Energy Regulatory Authority (Zera) said Government in consultation with players in the petroleum industry last week forestalled another price hike.

“The fuel prices continued to increase during the past week,” reads the statement.

“Pump prices were supposed to increase but after consultations with the Government and industry, it was agreed to maintain the current prices while monitoring market developments.

“The public and operators are advised that the blending ratio remains at E0 (Ethanol 0). Operators may sell the petroleum products below the prescribed prices depending on their trading advantages and should display prices in a prominent place as provided for by the fuel pricing regulations.”

Confederation of Zimbabwe Industries (CZI) president Mr Takura Matsheza said the obtaining fuel hikes have hit industry hard and are threatening ongoing economic recovery efforts.

“It’s a very difficult situation for us as industry and the Government as well because they depend heavily on taxes from the energy sector,” he said.

“But at the moment it appears that there is no other way than to reduce taxes and levies to protect the economy as a whole and we have already made this proposal to Government.”

In a positive development, the prices of precious metals like gold have gone up.

President Mnangagwa said the fact that Zimbabwe produces some of these precious metals means the Government can leverage on their firming international prices to minimise economic shocks.

“As I write, prices of key minerals which Zimbabwe has and offers to the world, are firming up on the world market. Gold is creeping towards US $2000 an ounce; palladium which is part of our PGMs is well above US$ 3000; the price of platinum is firming daily, pointing to bright prospects.

“Lithium, already enjoying a pride of place because of the seismic shift to green economies, can only bring rich rewards to our economy.”

President Mnangagwa said investments in chrome, tin and iron are also on an upward trend.

“Diamonds are holding their own, in fact rising. My recent meeting with representatives of the World Diamond Council in Brussels showed a great appetite for our parcel,” he said.

“Soon our Zimbabwe Consolidated Diamond Company will be in the market with several parcels.

“All these good auguries in the mining sector make our USD$12 billion target realistic and achievable by 2023 if not much earlier.” Sunday Mail.