HomeBusinessGovt Accuses Fuel Companies of Shortchanging Consumers

Govt Accuses Fuel Companies of Shortchanging Consumers

GOVERNMENT has accused fuel companies of charging “illegal prices” in response to soaring world prices.

Ministry of Energy and Power Development permanent secretary Justin Mupamhanga  said his ministry would “strongly look” into the issue of companies that raise fuel prices without government approval.

Mupamhanga said the legal price of petrol was now US$1,30 and diesel US$0,95 after factoring in the movement of oil, internal costs and transportation. He however said fuel dealers started to charge the high prices before June 7.

There are 80 oil companies registered in the country.

“We do price reviews every month to ensure we do not destabilise the market and a review is made if there is need,” Mupamhanga told businessdigest on Wednesday.

“The increases by local oil companies were illegal as the ministry and the oil companies had agreed that price changes would only be effected on June 7,” he said.

The price of petrol has increased by about US$0,30 inside two weeks in what oil companies said was a response to rising international fuel prices which have seen crude oil prices leap from US$55 per barrel last month to US$71 per barrel on Wednesday this week.

Economists say a US$0,30c rise in fuel price translates to an average increase of about 25% in the price of basic goods.

“The price oil companies were charging before June 7 was illegal, oil companies were short changing consumers. Any prices above the agreed prices are illegal,” he said.

A litre of petrol that cost US$1 three months ago is being sold for between US$1,30 and US$1,35 at most service stations in the country.

Diesel rose marginally to between US$1,05 and US$0,95 from US$0,85.
A litre of paraffin costs US$0,75.

Mupamhanga said recent shortages of petrol on the market were mainly due to uncertainty in the pricing structure of the commodity. He said oil companies had assured the ministry that there would be a consistent supply of fuel.

He said since the end of the first quarter, low-quality fuel was being sold on the market at very low prices to attract customers.

Mupamhanga said an audit carried out at 12 filling stations in Bulawayo late last month revealed that only two were selling diesel with sulphur content below acceptable levels.

Under the existing regulations, fuel companies are only allowed to sell diesel with a maximum sulphur content of 0,05 particles per million.

Excessive sulphur in diesel leads to the generation of sulphurous and sulphuric acids which cause premature engine wear from corrosion.

“We are having problems with fuel coming from the South as opposed to the fuel coming from the East, which is transported via the Beira-Feruka pipeline and is subjected to quality checks.

“However, our officers are in the field checking right round the country and we expect to have a more clearer picture by mid-month,” Mupamhanga said.

Zimbabwe draws most of its fuel from Beira and this is distributed mostly to areas north of Zimbabwe while the southern parts are supplied by fuel obtained from South Africa by rail and road transport.

By Paul Nyakazeya

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