Harare – A new wave of fuel price blitz is set to hit Zimbabwe again barely 2 months after another skyrocketing price increase which brought the country to its knees.
A statement issued by the energy regulating authority Zimbabwe Energy Regulatory Authority (ZERA) said the price of fuel both diesel and petrol will go up. “Accordingly the prices of one litre of Petrol/Blend (E5) and Diesel (50) have been increased to RTGS$3.41 and $3.20 respectively starting 08 April 2019” ZERA said.
In its announcement, ZERA advised that petrol and diesel will be selling at $3.40 and $3.20 respectively between the period 01 April to 08 April 2019.
“Please note that these figures take into account the revised excise duty, represent maximum FOB and pump prices for the different fuels. Operators may however, sell at prices below the cap depending on their trading advantages,” said ZERA.
Although the move comes at a time neighbouring South Africa is also adjusting its prices of the commodity, Zimbabwe’s case is unique in that it comes at a time shortages have remained acute in the market in defiance of the price increase.
In January government adjusted the price of fuel by 150% in a move it said was designed to remove market distortions, thus ensuring market equilibrium. Although there was a temporary decrease in demand, the market has remained in disequilibrium as shortages prevailed.
In March, government went on to partially liberalise the importation of fuel to a select players notably in the real sector, in a bid to cushion the erratic supplies.
The move had the side effects of exposing producers and ultimately consumers as the cost of direct importation would result in increased costs of production across a number of goods.
In the first instances government had promised to cushion producers in the key sectors of mining, agriculture and other key sectors rebate on fuel purchases in order to keep costs low. Failure to adequately supply the market means government could not effect the desired rebate model effectively.
Prices have since been readjusting at an improved scale across the economy since these changes. The rate of price accelerations has however slowed month on month given the higher base of November 2019.
Compounding the fuel price induced increase is the liberalization of the exchange rate which has resulted in broader exchange rate pegged price revisions.
Against these developments Zimbabwe remains highly exposed and inflation is likely to remain under pressure as neighbouring South Africa also effects fuel price hikes. With effect from 4 April South Africa will effect a 9% fuel price hike barely coming a few weeks after the ESKOM rate hike of an almost similar margin. These hikes will play to the disadvantage of Zimbabwe whose major trading partner is South Africa. 40% of Zimbabwe’s imported goods by value are sourced from South Africa.
SA price changes will mean further inflationary pressure for Zimbabwe as SA producers adjust prices of goods to factor the shifting production costs.
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