HARARE – Zimbabwe on Tuesday gave oil firms the nod to hike petrol prices marginally, after a 300 percent hike in duty that came into effect last month.
The Zimbabwe Energy Regulatory Authority (ZERA) said effective April 8, 2019, petrol prices will rise by one cent to $3,41 per litre, from $3,40 currently but kept the price of diesel at $3,20 during the same period.
There has been a gradual rise in the fuel price since February when government revised it to $3,31 and $3,11 for petrol and diesel respectively, after an outcry by importers that restricted prices were driving them out of business.
But even as government placed the ceiling at $3,41 per litre, some service stations had already breached this rate, selling petrol at $3,42 per litre in Harare, while diesel was trading at more than $3,20 per litre.
The price was much higher in remote areas, where motorists mostly rely on black market supplies because service stations are dry.
Two weeks ago, global oil giant, Total Zimbabwe warned of deepening shortages in the aftermath of the devastating Cyclone Idai, which rattled three regional economies and left a trail of destruction.
The shortages have been deteriorating. On Monday, commuters struggled to find transport to and from work in major cities, with passenger transport operators responding by hiking fares to at least $1,5 per trip, from $1.
It is feared that a fresh wave of oil price rises could spark another round of prices hikes of goods and services and aggravate inflationary pressures.
Year on year inflation quickened to a ten-year high of 59,39 percent in February, from 56,9 percent in January, after being pushed by increases in the price of basic goods.
The rise places into jeopardy government forecasts that inflation will fall to between 10 percent and 15 percent by the end of the year.
Economists have already said the figure could be higher due to price pressures from the exchange rate and the effects of a devastating drought that has hit most of southern Africa.
ZERA said; “The prices of one litre of petrol/blend (E5) and diesel (50) have been increased to RTGS$3,41 and $3,20 respectively starting 08 April 2019”.
“Please note that these figures take into account the revised excise duty, represent maximum FOB and pump prices for the different fuels. Operators may, however, sell at prices below the cap depending on their trading advantages,” noted ZERA.
In March, the Zimbabwe Revenue Authority increased customs and excise duties by 300 percent, just after government gazetted its new currency, the RTGS dollar, which is now trading alongside a basket of foreign currencies in a liberalised market.
South Africa, Zimbabwe’s largest trading partner, also announced upward reviews of fuel prices this week.
But analysts said the Zimbabwean case was unique in that the product was hard to get.
“Although the move comes at a time neighbouring South Africa is also adjusting its prices of the commodity, Zimbabwe’s case is unique in that it comes at a time shortage have remained acute in the market in defiance of the price increase,” said Equity Exis, a Harare based advisory firm.
About two weeks ago Total warned against impending energy shortages in Cyclone Idai-ravaged Zimbabwe saying its customers could be in for deepening supply bottlenecks.
Total said it was working flat out to find alternative routes to ship fuel to Zimbabwe, where it controls over 60 percent of the fuel market, and supplies to bulk customers including mining firms.
It did not rule out impending shortages in the southern African country that is already in the grip of a blazing petroleum crisis ignited by foreign currency shortages that escalated in September last year.
“Following the devastating effect of cyclone Idai experienced in Malawi, Mozambique and Zimbabwe, the fuel supply chain logistics into Zimbabwe have been adversely affected,” said Chris Kasima, who handles fuel supplies to mines and other big consumers at Total Zimbabwe.
“Based on the information we have received, the following has since been established; the jetty in Beira (Mozambique) has been damaged and can’t receive vessels to discharge, pumping house roofing has been blown away, electrical board was affected, and the status is not yet known. Condition of pipeline from Beira to Zimbabwe is yet to be established and we still await NOIC (National Oil Infrastructure Company) update on the same. Given the above, the stocks in stock in Msasa may not be replenished in due time as required and this is likely to put pressure on the supply chain. We are ceased with finding a quick option and we will keep you posted on the developments and any cost structure implementations as we progress,” he said.