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Falling fuel prices ease pressure on consumers

by Staff Reporter
31 Jul 2022 at 07:08hrs | Views
The sustained drop in fuel prices, which saw prices being reviewed downwards twice over a two-week period this month owing to falling international crude oil prices and an increase in ethanol blending ratios, has brought relief to consumers, who now expect prices of goods and services to follow suit.

On Wednesday, the Zimbabwe Energy Regulatory Authority (Zera) reduced petrol prices by 9 cents to US$1,61 from US$1,70 per litre, while diesel is now selling at US$1,76, down from US$1,80.

The blending ratio has also been reviewed to E20, up from E15.

Energy and Power Development Permanent Secretary Engineer Gloria Magombo told The Sunday Mail that ordinarily prices of goods and services could start falling in response to the new fuel prices.

"For local fuel prices, it is basically a result of our FOB (free-on-board) structure which we have been tracking closely so that any downward movement in international prices reflects quickly locally," said Eng Magombo.

"Also, we have raised blending levels to E20, which really played a part in the reduction of prices.

"So we can say that's an important Government intervention.

"We hope that prices of goods and services can respond to this drop in fuel prices as quickly as they do when they go up."

In March, President Mnangagwa directed Government to consider domestic remedies, including a reduction of duty and surcharges on petroleum products, to control the price of petroleum.

As of March last year, Zimbabwe's total taxes and levies on diesel and petrol amounted to about US$0,30c per litre, a levy considered steep by economists.

Government has continued to explore measures to reduce the taxes further.

Crude oil, which is the baseline raw material for most petroleum products, rallied to historic prices this year following the conflict in Eastern Europe, peaking at US$123 per barrel in March, before coming down to around US$100 recently.

Business welcomed the reduction in fuel prices, which significantly contribute to operational costs.

Zimbabwe National Chamber of Commerce (ZNCC) chief executive officer Mr Christopher Mugaga said falling fuel prices will inject renewed impetus into the economy.

"Everyone knows that the conflict between Russia and Ukraine sent economic tremors not only to Zimbabwe but to the whole world, and we have been witnessing the rise of prices in all basic commodities," he said.

"It is clear that by the time these countries opened up channels for smooth trading, prices were definitely expected to decline and it is good news to our industry since fuel is the key driver of every economy."

Confederation of Zimbabwe Industries (CZI) president Mr Kurai Matsheza said retreating fuel prices instil "hope and confidence".

"It is a welcome development and as industry we expect to start seeing basic commodities prices going down. We also hope that fuel prices continue to drop."

According to Information, Publicity and Broadcasting Services Permanent Secretary Mr Nick Mangwana, Government will continue implementing measures to cushion citizens.

"We are defying the odds by continuing to drop fuel prices. We should see the effect of this reduction trickling down to goods on the shop shelves," he wrote on Twitter on Friday.

Source - Sunday News