Mthuli Ncube hikes fuel levy

The Government of Zimbabwe has increased the Strategic Fuel Reserve Levy on petrol and diesel as part of a broader effort to safeguard national fuel supplies and price stability amid rising global market uncertainties.

Through Statutory Instrument 50 of 2025, Finance, Economic Development and Investment Promotion Minister Professor Mthuli Ncube announced that the levy has been adjusted upwards, effective May 9. Petrol will now attract a levy of US$0,2470 per litre, up from US$0,1770, marking a 28.34 percent increase. The diesel levy rises from US$0,1570 to US$0,1870 per litre, an increase of approximately 19.1 percent.

The Strategic Reserve Levy is a critical component of the country's fuel policy, with proceeds used to build and maintain emergency fuel stockpiles. These reserves ensure the availability of fuel during disruptions caused by geopolitical tensions, supply chain breakdowns, or other global crises.

In a statement accompanying the announcement, Treasury said the revised rates align Zimbabwe with international best practices and are part of a long-term plan to enhance the country's energy resilience.

Economist Dr Prosper Chitambara said the government's decision reflects foresight, particularly at a time of growing instability in global trade. "Fuel is the lifeblood of the economy. Without a robust strategic reserve, we are at the mercy of international disruptions. This measure is about protecting essential sectors - agriculture, transport, healthcare - that depend on consistent fuel access," he said.

Chitambara, however, warned that the increase comes at a time when Zimbabwe's fuel prices are already among the highest in the region due to multiple taxes and levies. He urged policymakers to find ways to relieve the burden on consumers to avoid a ripple effect on inflation.

Despite the increase in the levy, fuel pump prices will remain unchanged for May 2025, according to the Zimbabwe Energy Regulatory Authority (Zera). The regulatory body, which sets prices monthly based on average global oil benchmarks from the previous month, said petrol will continue to sell at US$1,61 per litre, while diesel will remain at US$1,52 per litre.

This price stability follows April's modest reduction in diesel prices, which fell by 1.93 percent from US$1,55 per litre. Internationally, the Brent crude oil benchmark saw slight fluctuations, closing April at US$68,21 per barrel, compared to its opening price of US$68,45. The volatility was largely attributed to geopolitical tensions and production uncertainties among Opec+ member states.

Energy economist Chipo Moyo welcomed the move to hold prices steady, noting that fuel cost predictability is vital for businesses operating with tight margins. "While reductions are always desirable, stability allows companies to plan operations, manage costs, and avoid unexpected financial shocks," she said.

Consumers have also reacted positively to the decision to maintain fuel prices. Harare-based accountant Kelvin Mombe said it brought relief to households already under pressure from inflation. "In this economy, just knowing that transport and grocery costs won't suddenly rise is a major help," he said.

The decision is also expected to benefit Small and Medium Enterprises (SMEs), which are particularly sensitive to input cost volatility. Eddie Saunyama, who runs E&H Construction, said fuel is one of his company's biggest operational expenses. "When prices are stable, we can budget accurately, quote jobs with confidence, and avoid transferring unexpected costs to clients," he said.

Analysts say the government's approach - increasing the fuel reserve levy while keeping retail prices steady - demonstrates a balancing act between long-term energy security and short-term economic stability. As global energy markets remain unpredictable, Zimbabwe appears intent on building a buffer that will protect its economy from future shocks while maintaining affordability for its citizens and businesses.