'Fuel price drop must benefit consumers'

BUSINESSES should review prices of goods and services downwards in line with the recent decline in fuel prices, a Cabinet Minister has said.

This comes as interventions by the Reserve Bank of Zimbabwe (RBZ)'s Financial Intelligence Unit (FIU) and Ministry of Finance and Economic Development to tame exchange rate volatility, inflation and market indiscipline have been well-received by the market.

Energy and Power Development Miniser Zhemu Soda told The Sunday Mail that the Government was "encouraging all sectors of the economy to pass the realised savings (of the drop in fuel prices) to the consumer through reducing the prices of goods and services".

"On its part, Government, through the regulator (Zera), will always respond timely to international price movements."

Authorities, he said, would continue implementing measures to cushion the public from rising prices of fuel caused by the conflict in Eastern Europe.

The recent increase of ethanol blending to a maximum 20 percent was one of the strategies adopted to counteract the effect of soaring global fuel prices.

"Zimbabwe is currently producing enough ethanol to blend with ethanol at the highest blending level of 20 percent. The blending of petrol with ethanol is itself a measure that reduces petrol prices when internal fuel prices are high."

The FIU recently warned businesses that were indexing their prices to parallel market exchange rates even after benefitting from the weekly foreign currency auction.

FIU director-general Mr Oliver Chiperesa said most businesses had taken heed.

Some contractors involved in major Government programmes have been red-flagged for channelling local currency to the parallel market in order to mop up US dollars.

"We realised that Government contractors who provide goods and services were contributing to the instability on the foreign exchange parallel market. In fact, it appeared to be the biggest factor. So the FIU started monitoring accounts of those Government contractors. When we started doing that, we have seen some form of stability with parallel market rates."

Businesses involved in illicit practices are set to be penalised.

"What we are still not happy about are some big businesses charging rates of up to 1 200. So that really proves to us that there are exchange rate manipulators out there who just dream up rates that have nothing to do with what is on the ground.

"We have seen a hotel in Nyanga charging 1 200 and we are on them. Even some institutions are using a rate of 1 000, again we are on them.

"So that will be the next phase of our exercise — targeting those who really cannot possibly justify the rates they are using."