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Govt explains frequent fuel price hikes

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Govt explains frequent fuel price hikes

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Energy and Power Development Minister, Zhemu Soda, has explained the frequent fuel price increases saying they are a result of international developments which Zimbabwe has no control over.

He said over the past few days, fuel prices had risen significantly on the global market in the wake of Russia’s special military operation in Ukraine, which had affected supply trends as the former was the second biggest producer of petroleum products in the world.

The Zimbabwe Energy Regulatory Authority (ZERA) yesterday announced that the price of diesel had risen by 17 cents and petrol by 16 cents.

This was the second increase inside four days after ZERA on March 5 raised fuel prices to US$1,51 for both diesel and petrol.

Minister Soda said the prices at which traders were selling fuel since the last review on March 5, was now below the cost of replenishing stocks. Since the last review, the cost of importing petrol and diesel has gone up by up to 11 percent.

At US$1,68 per litre now, diesel is 24 cents up from the February price of US$1,44, while petrol is now pegged at US$1,67 per litre.

“The war situation in Ukraine is constraining production and international movement of the commodity. It is a precarious situation; beyond our control.”

ZERA also adjusted liquefied petroleum gas (LPG) prices, raising the retail price to US$2,07 from US$2,03 per kg.

Speaking at a media conference in Harare yesterday, Minister Soda said: “Zimbabwe imports almost all of its fuel requirements. Any increase in the price of oil on the international market therefore translates into an increase in fuel prices in the country.

“Occasioned by the conflict between Russia and Ukraine, supply of the petroleum products has been constrained, resulting in an increase in the FOB prices,” he said.

A rapid increase in oil prices on the international market demanded more frequent price reviews compared to when international prices were relatively stable.

“The objective is to ensure that oil companies remain viable which would in turn, ensure that the local market continues to receive adequate supplies of the fuel.

“To that end, petroleum price reviews shall be done on a weekly basis to preserve the price of the products in line with the situation obtaining on the international market,” said the minister.

Asked whether Government could intervene to cushion users of fuel from the hikes, Minister Soda said if the situation continued, Government would find ways to lessen the burden.

“As you are aware, the issue of pricing of petroleum is cross-cutting. There are a lot of ministries involved in the determination of fuel prices. There are some levies.

“I think you are aware we have debt redemption levies and Zinara levies for example. I wouldn’t at this point in time say that there is something that we are going to do immediately but as the pressure continues to mount like this, obviously the Government will always sit down and find if there are means and ways by which runaway prices can be contained. Obviously at an appropriate time, that can always be looked into,” said Minister Soda.

He assured the nation of fuel availability saying the public should not panic.

He also urged the public and fuel suppliers not to hoard fuel as the measures being put in place by Government were for the benefit of the entire nation.

Reacting to the latest round of increases yesterday, parliamentarians expressed concern at recent developments and urged Government to urgently look at ways of ameliorating the situation.

During debate in the National Assembly, legislators said the fuel price hikes would most likely result in an increase in prices of basic commodities, threatening the economic gains made by Government.

Dzivaresekwa legislator Mr Edwin Mushoriwa said it was time Government reviewed downwards, the level of taxes and levies imposed on fuel to cushion the public.

“The various taxes and levies contribute approximately 30 percent to the price of fuel so isn’t it possible to review them downwards?” he said in a question directed to the Deputy Minister of Finance and Economic Development, Clemence Chiduwa.

Deputy Minister Chiduwa said the proposal was welcome but Treasury could not implement it alone.

“That would require a whole of Government approach because there are issues making up the price that come through various ministries and Government agencies,” he said.

Guruve South legislator Cde Patrick Dutiro asked Energy and Power Development Deputy Minister, Magna Mudyiwa how the conflict in Ukraine had affected fuel supplies to the country.

Deputy Minister Mudyiwa said the supplies had so far not been affected but prices had shifted upwards.

Legislators requested the Ministry of Finance and Economic Development to issue a ministerial statement on fuel prices and supply and measures being taken to ensure affordability by the generality of the public.

Confederation of Zimbabwe Industries president Mr Kurai Matsheza said: “The fuel price hike is worrisome as it causes the cost of production to rise immensely, leading to goods being more expensive.”

Mr Matsheza said the Zimbabwean economy needed to be cushioned from the impact of the global fuel situation to protect consumers and keep prices stable.

Grain Millers Association of Zimbabwe president Mr Tafadzwa Musarara urged the Government to step up grain imports to boost the country’s wheat stocks.

Given the importance of Russia and Ukraine to global grain markets, uncertainty over the supply outlook meant grain prices would also remain elevated and volatile. Herald.

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