News / National
Fuel to go down to $1,32 petrol, $1,20 diesel
09 Jan 2015 at 11:30hrs | Views
Zimbabwe fuel prices should be significantly lower than they currently are even when costs are added, the Ministry of Energy and Power Development said today.
Government has directed all fuel retailers to revise their prices downwards to $1,20 per litre for diesel and $1,32 for petrol by January 14 this year after outrage over refusal to slash fuel prices after a 50 percent price markdown in global oil prices.
The price of Brent crude oil fell below $50 a barrel for the first time on Wednesday since May 2009, from $110 in June last year, resulting in most regional countries pegging their petrol and diesel prices around $1,20 a litre.
Said Minister of Energy and Power Development Samuel Udenge this afternoon: "Our own fuel prices have not gone down that much in tandem with crude oil prices but should however go down to levels that reflect crude oil prices having factored in all costs relevant to obtaining the refined products we buy... Maximum pump prices allowable based on the pricing formula are - for June 2014 $1,56 per litre for diesel and $1,64 per litre for petrol. Using end of December 2014 prices results in prices of $1,20 for diesel and 41,32 for petrol per litre," he said.
In Zimbabwe, fuel has continued retailing at an average of $1,45 a litre for diesel and $1,50 for petrol.
Minister Udenge said in order to protect the consumer and the supplier, his ministry was ordering local service stations to ensure that pump prices lag behind by two weeks to that of FOB prices.
"Based on a number of factors including the imports throughput and consumption figures, it would be fair to have price movement at the pump price lagging behind by two weeks to that of FOB prices. This should apply both ways, that is when prices go down and when prices go up. This mechanism will protect both the consumer and the supplier," he said.
"I am hoping to get co-operation from all players. As a Governemnt, the last thing we want to do would be to go back to price controls. We believe this is not necessary at the moment even though some countries in the region actually have price controls for fuels."
Zimbabwe Energy Regulatory Authority chief executive Gloria Magombo recently told one publication that her organisation expected to see a reduction in fuel prices in the coming few months.
Magombo said the delayed effect was due to longer transportation routes of fuel into local retail market, which took around two months for ships to dock at Beira port from the oil rigs.
Energy and Power Development Minister Samuel Undenge told journalists that it is worrisome that local retailers have failed to adjust their prices in tandem with the international oil prices and this called for Government intervention.
He said the pricing of fuel in the country was based on a cost plus formula. This entails obtaining the FOB prices at the port Beira. Operators add pipeline charges, levies and taxes, admin costs and distribution costs.
He said the retailers told Government that they wanted to finish up their existing stocks and it only take two weeks to finish.
Government however issued an ultimatum for the retails to have revised their prices by January 14 this year.
Maximum pump prices allowable based on pricing formula for June 2014 were $1,56 for Diesel and $1,64 for petrol.
Dr Undenge said using end of December 2014, prices should be at $1,20 for diesel and $1,32 for petrol.
Rosemary Siyachitema, the Consumer Council of Zimbabwe (CCZ) executive director, had earlier said responsible authorities must act on the issue immediately to ensure consumers benefit from the decline in international oil prices.
"It seems it is very easy for fuel dealers to effect a price hike when global oil prices rise but are very reluctant to reduce prices when there is a decline in oil prices," she said.
"Considering the fact that international oil prices have so far made history by declining by close to 50 percent, Zimbabweans - like any other nationals - should have seen a substantial decrease in fuel prices and not the meagre three cents' reduction."
Analysts said high oil prices over the last decade helped countries such as the United States and Canada to expand local production.
The consumer watchdog said fuel was one of the major cost-push factors in Zimbabwe and the government must ensure that there was a corresponding benefit to locals when there was an international price reduction on commodities.
"Why it is that the consumer is the only one who has to tighten his belt all the time?" Siyachitema queried, calling for an investigation on the conspiracy that was taking place in the fuel sector.
Tourism minister Walter Mzembi also weighed in on the matter and said high fuel prices were hindering the development of tourism in the country.
"There is serious cartelling and collusion taking place in the sector and this must be investigated," Mzembi said.
Mzembi noted that high fuel prices caused Dutch airline KLM to withdraw from the Zimbabwean route.
Commentator Francisco Sileya said a serious reduction in fuel prices had been due for some time.
"How can oil prices be at a third of their highs and still we are paying a very high price in Zimbabwe?" he asked.
"This is another example of how poor leadership is failing to manage the economy for the benefit of Zimbabweans."
Sileya noted that high fuel prices were driving up food and transport costs in Zimbabwe.
"They are also making it harder for local businesses to grow, flourish and create much needed jobs," he said.
"It also raises the question of how we can hope to export Zimbabwean crops and products across the region when the cost of transporting them is so high."
Government has directed all fuel retailers to revise their prices downwards to $1,20 per litre for diesel and $1,32 for petrol by January 14 this year after outrage over refusal to slash fuel prices after a 50 percent price markdown in global oil prices.
The price of Brent crude oil fell below $50 a barrel for the first time on Wednesday since May 2009, from $110 in June last year, resulting in most regional countries pegging their petrol and diesel prices around $1,20 a litre.
Said Minister of Energy and Power Development Samuel Udenge this afternoon: "Our own fuel prices have not gone down that much in tandem with crude oil prices but should however go down to levels that reflect crude oil prices having factored in all costs relevant to obtaining the refined products we buy... Maximum pump prices allowable based on the pricing formula are - for June 2014 $1,56 per litre for diesel and $1,64 per litre for petrol. Using end of December 2014 prices results in prices of $1,20 for diesel and 41,32 for petrol per litre," he said.
In Zimbabwe, fuel has continued retailing at an average of $1,45 a litre for diesel and $1,50 for petrol.
Minister Udenge said in order to protect the consumer and the supplier, his ministry was ordering local service stations to ensure that pump prices lag behind by two weeks to that of FOB prices.
"Based on a number of factors including the imports throughput and consumption figures, it would be fair to have price movement at the pump price lagging behind by two weeks to that of FOB prices. This should apply both ways, that is when prices go down and when prices go up. This mechanism will protect both the consumer and the supplier," he said.
"I am hoping to get co-operation from all players. As a Governemnt, the last thing we want to do would be to go back to price controls. We believe this is not necessary at the moment even though some countries in the region actually have price controls for fuels."
Zimbabwe Energy Regulatory Authority chief executive Gloria Magombo recently told one publication that her organisation expected to see a reduction in fuel prices in the coming few months.
Magombo said the delayed effect was due to longer transportation routes of fuel into local retail market, which took around two months for ships to dock at Beira port from the oil rigs.
Energy and Power Development Minister Samuel Undenge told journalists that it is worrisome that local retailers have failed to adjust their prices in tandem with the international oil prices and this called for Government intervention.
He said the pricing of fuel in the country was based on a cost plus formula. This entails obtaining the FOB prices at the port Beira. Operators add pipeline charges, levies and taxes, admin costs and distribution costs.
He said the retailers told Government that they wanted to finish up their existing stocks and it only take two weeks to finish.
Government however issued an ultimatum for the retails to have revised their prices by January 14 this year.
Maximum pump prices allowable based on pricing formula for June 2014 were $1,56 for Diesel and $1,64 for petrol.
Dr Undenge said using end of December 2014, prices should be at $1,20 for diesel and $1,32 for petrol.
Rosemary Siyachitema, the Consumer Council of Zimbabwe (CCZ) executive director, had earlier said responsible authorities must act on the issue immediately to ensure consumers benefit from the decline in international oil prices.
"It seems it is very easy for fuel dealers to effect a price hike when global oil prices rise but are very reluctant to reduce prices when there is a decline in oil prices," she said.
Analysts said high oil prices over the last decade helped countries such as the United States and Canada to expand local production.
The consumer watchdog said fuel was one of the major cost-push factors in Zimbabwe and the government must ensure that there was a corresponding benefit to locals when there was an international price reduction on commodities.
"Why it is that the consumer is the only one who has to tighten his belt all the time?" Siyachitema queried, calling for an investigation on the conspiracy that was taking place in the fuel sector.
Tourism minister Walter Mzembi also weighed in on the matter and said high fuel prices were hindering the development of tourism in the country.
"There is serious cartelling and collusion taking place in the sector and this must be investigated," Mzembi said.
Mzembi noted that high fuel prices caused Dutch airline KLM to withdraw from the Zimbabwean route.
Commentator Francisco Sileya said a serious reduction in fuel prices had been due for some time.
"How can oil prices be at a third of their highs and still we are paying a very high price in Zimbabwe?" he asked.
"This is another example of how poor leadership is failing to manage the economy for the benefit of Zimbabweans."
Sileya noted that high fuel prices were driving up food and transport costs in Zimbabwe.
"They are also making it harder for local businesses to grow, flourish and create much needed jobs," he said.
"It also raises the question of how we can hope to export Zimbabwean crops and products across the region when the cost of transporting them is so high."
Source - online
