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Regulator probes oil pricing

BY FIDELITY MHLANGA

ZIMBABWE’s energy regulator has lined up a comprehensive survey that is set to reveal the impact of fuel prices on the cost of goods and services in the country.

Fuel is 44% more expensive in Zimbabwe compared to regional peers, according to data from the Zimbabwe Energy Regulatory Authority (Zera), the regulator.

There has been an outcry, with consumers querying why Zimbabwe’s petroleum prices have been the highest in southern Africa, even in United States dollar terms.

Industries have also indicated high fuel and electricity prices have abated unsustainable costs of doing business in Zimbabwe, which was in 2018 rated as the second most expensive market in the region.

Zera chairman David Madzikanda blamed the high prices on high and multiple taxes, but said the survey would explain most of the questions that are being  asked by consumers.

While in the regional fuel prices average about US$0,94 per litre, prices have been around US$1,32 per litre for diesel and about US$1,34 per litre for petrol in Zimbabwe.

“We will be conducting a study to show that if there is a 5% price increase in fuel, how much does it translate to the farmer, the mining and retail sectors,” Madzikanda said.

“If we were to conduct those studies, we can then say to government there is a 5% increase in fuel, we expect a 0,02% increase in the price of bread.

“We are working towards that, we expect participation of industry.

“If you remove the tax and duty component, our fuel is just as competitive.

“In other words, there are no inefficiencies in Zera. We are very competitive.

“But if you add the taxes and duties, our fuel becomes 44% more expensive relative to the region.

“The difference is primarily on taxes and duties, which is an issue that we obviously raised with government because it has implications on competitiveness of industry.”

There has also been grave concern over the cost of locally produced ethanol, which is being sold at around US$1,10 per litre.

“There is a bit of monopoly in ethanol and there are avenues we are looking into. Hopefully the introduction of competition will take off.

“We have a statutory instrument, which allowed  ethanol producing companies to participate in ethanol blending,” said Masimba Kambarami, chairman of the petroleum subcommittee in the Zera board.

Economist Victor Bhoroma said while it was good that Zera was conducting a study to find out the exact component of fuel to the cost of production, it was pertinent for the regulator to clarify why Zimbabwe’s fuel is the most expensive in the region.

“It’s good that they are doing the study so they establish the exact component of fuel to the cost of production per industry or sector as there are differences,” Bhoroma told Standardbusiness.

“However, Zimbabwean fuel is the most expensive in the region because of higher excise duties among other levies charged by government.”

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