Zera speaks on varying fuel prices

HARARE - Zimbabwe's fuel dealers are retailing petrol and diesel at different prices due to the absence of the National Oil Company of Zimbabwe (Noczim), which negotiated the commodities’ procurement rates on behalf of traders.

Gloria Magombo, Zimbabwe Energy Regulatory Authority (Zera) chief executive, said when Noczim was operational, it was easier for fuel prices to be monitored as fuel procurement was mainly done by the now defunct parastatal”.

“The loss of Noczim has definitely affected the country. The procurement of fuel by smaller players now means they have varied procurement costs,” she told a press meeting recently.

Zimbabwe’s petrol price varies from $1,48 to $1,55 while diesel retails at between $1,36 and $1,42.

Magombo said “in the past were we would have Noczim doing bulk procurement. We now have small players playing wholesalers, which the market has felt.”

Between 2009 and 2012, loss-making parastatals were privatised resulting in the unbundling of Noczim into two firms — Petrotrade and the National Oil Infrastructure Company of Zimbabwe (Noicz).

While the move was ideal, the Noczim case left a gap in the energy sector, according to Magombo.

As part of the reforms, Petrotrade took over national fuel importation while Noicz controlled fuel infrastructure such as Masasa and Mabvuku storage tanks and the oil pipeline from Harare to Feruka.

Magombo, however, said Zera anticipated a fuel price decline due to the declining international oil prices.

Globally, oil price has declined to a five-and-a-half year low of $59 per barrel from around $110.

“As you are aware oil prices have been depressed for a while now globally. Although this will take about two months to take effect on the local market, prices will definitely go down next year as the procurement price will be depressed,” Magombo said.

“So prices will generally range from $1,32 to $1,40 for diesel and $1,48 to $1,54 for petrol. The margins being a result of differing procurement prices the various players have varied business costs as well,” she added.

Meanwhile, fuel prices have gone down by an average $0,02, after price increases were recorded in August and September due to government’s introduction of a duty measure of five cents per litre on all fuel imports.

Magombo said the delayed effect is due to longer transportation routes of fuel into local retail market, which takes around two months for ships to dock in Beira port from the oil rigs. Ideally, providers secure three to six months fixed price contracts as a way of hedging against price increases, which would not have been the case had Noczim been functional.

Zimbabwe regulates fuel prices through Statutory Instrument (SI) 80 of 2014 which provide the framework for the pricing of fuel.

However, prices are never the same in the market due to differing operating costs for the various fuel providers.

Comments (7)

A shocking statement to say the least. The CEO of the REGULATORY authority raising hands in surrender faced with greed of market players. I suspect she has a resignation letter ready for this is an admission of failure. It is the responsibility of ZERA to ensure consumers enjoy drop in fuel prices, NOT to justify the inefficiencies of suppliers. Get working Gloria or SHIP OUT!

Ken Girtz - 1 January 2015

im sure she is operating a fuel company. take a cue from POTRAZ Gloria. Your companies a quick to raise fuel prices when international prices rise. We shld see the same as international prices dropped by half no need for NOCZIM. Tipevo maserious Gloria ndiwe wasara dai waenda hako nemaminister ako coz mmmm zvirikukuremera izvi

Chando - 2 January 2015

It has nothing to do with the absence of Noczim but the systematic pushing out of other small indigenous players due to Zera's exorbitant licencing costs. The industry is now being run by a cartel. Can she please name the so called small oil companies which important.

Wali - 2 January 2015

Gloria prices of fuel has gone down by almost 50% and your clients reduce by 0.2% and you site transport problems, hey you must hand over your resignation letter today if you are a principled woman.

maita - 9 January 2015

This Gloria girl cannot stop to amaze me, so Zimbabwe is the only country affected by ships taking 2 months to dock at Beira, what of Zambia? Do they have a sea port with flying ships?

maita - 9 January 2015

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