Mthuli Ncube scraps diesel taxes to avert price surge

The Government of Zimbabwe has temporarily removed all taxes on diesel in a bid to avert a steep increase in fuel prices, with the measure taking effect immediately.

The decision comes amid rising global fuel prices driven by geopolitical tensions in the Middle East, which have disrupted oil markets and pushed up import costs for Zimbabwe and other countries.

Taxes suspended include Excise Duty, the Zimbabwe National Road Administration (ZINARA) Road Levy, Carbon Tax, and the Strategic Reserve Levy. Together, these charges amount to approximately US$0.54 per litre — a significant component of the pump price.

Without the intervention, diesel prices would have surged to around US$2.65 per litre. Following the tax removal, the new diesel price has been set at US$2.11 per litre, while the blended diesel price stands at US$2.23.

In a statement, Finance, Economic Development and Investment Promotion Minister Mthuli Ncube said the move is aimed at shielding consumers and key economic sectors from external shocks.

"This measure reflects Government's commitment to protecting both consumers and productive sectors from external shocks, while safeguarding macro-economic stability," he said.

Professor Ncube added that the Government is making a deliberate fiscal sacrifice to prioritise economic stability and citizens' welfare over short-term revenue.

The intervention is expected to cushion businesses from rising operational costs, stabilise prices of basic goods and services, and help anchor inflation expectations, particularly in sectors such as mining, agriculture, transport, and logistics.

Meanwhile, the Zimbabwe Energy Regulatory Authority (ZERA) said the Government continues to closely monitor fuel supply and pricing dynamics.

According to ZERA, the country currently holds more than three months' worth of petroleum stocks across supply chains, including imports from Beira and inland storage facilities.

Authorities are also working with oil traders to open alternative supply routes not affected by the Middle East conflict, while ensuring equitable distribution of fuel, particularly to remote areas. State-linked entities such as Petrotrade and NOIC are actively involved in these efforts.

In addition, Government has approved the importation of diesel by road, complementing existing pipeline and rail systems to enhance supply flexibility.

ZERA noted that while supply remains stable, pricing pressures persist, necessitating regular reviews to avoid shortages and arbitrage.

The Government said it will continue monitoring global developments and may introduce further measures if necessary to maintain fuel availability and protect the economy.