Fuel prices to go down

THE price of diesel will go down next year as  logistics associated with transporting the commodity will fall by half while the commodity will also be exempted from paying a road levy of 4c/litre.

The Zimbabwe Energy Regulatory Authority (Zera) said as the country adopts the use of low sulphur diesel 50 (D50), the product will be brought into the country through a pipeline, reducing costs and exempted from the road levy.

Zera chief executive engineer Gloria Magombo said migrating to pipeline transportation will reduce logistical costs by about 6,5 cents per litre.

"Once the process of transportation of D50 by pipeline begins, the prices of D50 and D500 will converge. The National Oil Infrastructure Company (NOIC) is the owner of pipelines and bulk storage facilities in Zimbabwe and was tasked with constructing the pipelines and depots for the pumping and storage of diesel 50. D50 will continue to be imported from the Arab Gulf and the transportation of D50 by pipeline will reduce the logistics costs from 13c/ litre to 6,5c/litre. Furthermore, the road levy of 4c/litre will also not apply to the fuel," said Eng Magombo.

Adoption of diesel 50 is in line with the dictates of the National Energy Policy (NEP) to promote the use of low sulphur and cleaner fuels as a measure to curb vehicle emissions, improve outdoor air quality and engine performance. NEP banned fuel procurement companies from importing diesel 500 (D500), effective 1 November this year.

A grace period of four months was given to flush out residual stocks of D500 from the distribution infrastructure as it is expected that with effect from 1 March next year, all diesel sold at retail sites shall be D50 and selling of any other fuel grade will become an offence.

Zimbabwe's roughly 1,2 million vehicles require about 1,5 billion litres of fuel per year, both diesel and petrol, to keep the wheels on the tarmacs.

Importing the fuel has since the better part of last year been a struggle due to shortage of foreign currency.

Eng Magombo added that most of the main fuel companies have been selling D50 for over a year. She added that D50 had constituted eight percent of the national diesel consumption for the first nine months of 2017.

"Fuel stations have been appraised and have embraced the development. It must be noted that D50 has been part of the products that have been retailed in Zimbabwe for over a year. The same infrastructure that was used for D500 will be used for D50. The consumption of D50 constituted eight percent of the national diesel consumption for the period January to September 2017," she added.

She said plans to switch to a lower sulphur fuel, diesel 10 (D10) by 2020 were on the table in line with Southern African Development Community (Sadc)'s renewable energy strategy.

The Government is also working on moving from unleaded petrol 93 to unleaded petrol 95, which will also come with climatic, environmental and health benefits. Zimbabwe has one of the highest prices of fuel in the region with diesel now retailing at $130 while petrol is around $1,44 per litre.

Meanwhile, Zimbabwe's 20 percent ethanol and 80 percent unleaded petrol blending ratio has saved the country $63.5 million in foreign currency in the first nine months of 2017.

This comes after Government increased ethanol blending from 10 to 20 percent due to increasing supplies of the product in June this year.