• Zimbabwe’s September petrol and diesel prices are at $1.55 per litre, driven by heavy taxes ($0.5720-$0.6320 per litre) and blending costs ($1.10 per litre for petrol)
• The mandatory 20% ethanol blend adds significant costs to petrol, reflecting Zimbabwe’s push for renewable energy
• Global average prices are at $1.29
• Unlike many African nations like Nigeria and Algeria, Zimbabwe does not subsidize fuel

Harare- Zimbabwe’s fuel prices have seen a minor adjustment, with petrol prices dropping by one cent from $1.56 in August to $1.55 in September, while diesel prices have remained unchanged at $1.55, according to the latest data from the Zimbabwe Energy Regulatory Authority (ZERA).

This slight reduction in petrol prices reflects global trends, as international fuel prices are declining due to increased oil production by OPEC+ and other producers, leading to larger global oil inventories and slower demand growth.

The U.S. Energy Information Administration (EIA) forecasts Brent crude prices to fall to approximately $58 per barrel by late 2025 and around $51 by early 2026, with potential for further declines due to sustained high global oil inventories and increased U.S. output.

Despite these global trends, Zimbabwe’s fuel prices remain significantly higher than the global average of $1.29 per litre for gasoline, as reported by GlobalPetrolPrices.com on September 1, 2025, positioning Zimbabwe among the highest fuel price bands in Africa.

This discrepancy raises questions about the structural and policy factors driving Zimbabwe’s elevated fuel costs, particularly the role of blending costs and the absence of fuel subsidies.

The high fuel prices in Zimbabwe are largely driven by a combination of taxes, levies, and blending costs. For diesel, total taxes and levies amount to $0.5720 per litre, while for petrol (blend), they reach $0.6320. Administrative costs add $0.0210 per litre for both fuel types, and distribution costs contribute an additional $0.035 per litre.

 A significant factor for petrol is the blending cost of $1.10 per litre, driven by a mandated 20% ethanol blend, which is intended to promote renewable energy and reduce reliance on imported fossil fuels.

When factoring in wholesale costs, margins, wholesale proceeds, and dealer margins, the final price for both diesel and petrol rounds up to $1.55 per litre.

Zimbabwe has high fuel prices compared to regional peers like Libya ($0.028 per litre), Algeria ($0.223), and Egypt ($0.320), where subsidies keep diesel prices among the world’s lowest.

A critical analysis of Zimbabwe’s fuel pricing structure reveals the complex interplay of blending costs and the lack of subsidies.

The mandatory 20% ethanol blending, while environmentally motivated, adds a substantial $1.10 per litre to petrol costs, reflecting the high cost of ethanol production and blending infrastructure in Zimbabwe.

This policy, aimed at reducing import dependency and supporting local agriculture, contrasts with the approach of many African nations that rely on fuel subsidies to cushion consumers.

Countries like Nigeria and Angola have historically spent billions on subsidies, Nigeria’s subsidies reached $3.9 billion annually, nearly double its health budget though these come with fiscal burdens and inefficiencies.

Zimbabwe’s decision to forgo subsidies avoids such fiscal strain but places a heavier burden on consumers, particularly in a context of high poverty rates and economic instability.

The high taxes and levies, combined with blending costs, suggest a reliance on fuel revenue to support government budgets, which disproportionately affects low-income households and small businesses reliant on fuel for transport and power generation.

The broader African context highlights the trade-offs of fuel subsidies and their impact on pricing.

Subsidies, while popular for keeping fuel affordable, often favour wealthier households that consume more fuel and drain public resources, Nigeria’s subsidies, for example, cost 3% of GDP, and Angola’s 2022 subsidy bill reached $2.1 billion.

Reforms to remove subsidies, as seen in Nigeria, Ghana, and Angola, have led to price hikes and public unrest, reflecting the political risks of such moves.

Zimbabwe’s high fuel prices, driven by blending costs and taxes rather than subsidies, avoid these fiscal pitfalls but result in prices that hinder economic competitiveness.

The blending mandate, while environmentally progressive, may need re-evaluation to balance sustainability goals with affordability, especially as global oil prices decline.

Policymakers could explore targeted tax reductions or alternative renewable energy incentives to lower costs without resorting to unsustainable subsidies, ensuring Zimbabwe aligns more closely with global market dynamics while addressing domestic economic pressures.

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