Zimbabwe govt reduces fuel prices

Mandatory blending of ethanol in unleaded petrol has been increased from 10 percent to 20 percent at the end of this month to reduce fuel price increases on the global market and give a relief to  Zimbabwean motorists as ethanol is cheaper than petrol at present.

Responding to questions from the media, Energy and Power Development Minister Zhemu Soda said blending at E10 had reduced the pump price of petrol by 4 US cents per litre while the move to E20 would further reduce the price by 7 US cents per litre.

"This blending is done for a variety of reasons and this is something that we are actually achieving. By using a locally produced product we are averting the dependence on foreign currency to import all the fuel requirements that we have for the country.

"Ethanol is cheaper than unleaded petrol which we are procuring from outside the country," said Minister Soda.

This is among the measures that include building up a larger strategic fuel reserve to minimise fluctuations and the creation of a fuel price stabilisation fund that will even out peaks and troughs in pricing.

Blending of petrol with ethanol was re-introduced in 2008 after the licensing of Green Fuel's Chisumbanje ethanol plant to minimise fuel shortages and reduce the huge fuel import bill.

Speaking after yesterday's Cabinet meeting, Information, Publicity and Broadcasting Services Minister Monica Mutsvangwa said the Government would strive to increase the strategic fuel reserve to minimise the effects of the instability in Eastern Europe, which were affecting fuel supplies globally.

"Government has, therefore, increased efforts to improve the strategic fuel reserve, with US$40 million worth of fuel having been procured in the last six months," said Minister Mutsvangwa.

"The intention is to maintain at least a 30-day stock cover, which at the current consumption levels translates to 150 million litres. This fuel will be released onto the market when necessary to plug supply gaps or to stabilise prices.

"Government intends to set up a fuel price stabilisation fund to cushion consumers from sharp increases in fuel prices. Discussions are on-going on the modalities and timing of the fund.

"Government will come up with measures to stabilise and ensure a consistent supply of fuel."

The resumption of petrol blending at E10 from April 25 and a subsequent increase to E20 by the end of May, was part of the immediate strategies being adopted.

Blending of fuel is exclusively conducted by licensed blenders only in compliance with Zimbabwe Energy Regulatory Authority regulations.

Government has had to constantly keep its hands on the pulse regarding ethanol blending thresholds in line with the prevailing levels of production, which sometimes fall to levels that cause intermittent shortages on the market.

This has often caused analysts to call for liberalisation of ethanol supply to include other businesses to create healthy competition.

Green Fuel's Chisumbanje Ethanol Project in the Eastern Highlands is a national project of strategic importance where ethanol is produced from sugarcane.

The plant is one of Africa's largest ethanol producers and consists of sugarcane plantations in Chisumbanje and Middle Sabi, with the ethanol plant being located in Chisumbanje.