Govt moves to slash fuel prices

HARARE - Facing mounting criticism over its inept handling of the country’s comatose economy, the government has given local fuel dealers an ultimatum to slash fuel prices by Wednesday next week (January 14).

Recently-appointed Energy minister, Samuel Undenge, told a news conference in Harare yesterday that government would take unspecified but stern action if fuel dealers failed to comply with the directive.

The minister decreed that diesel must retail for $1,20 a litre, while petrol should sell for $1,32 per litre.

“In June 2014, the Free on Board (FOB) prices at Beira were at $0,88 per litre for petrol and $0,86 for diesel.

“ These have since gone down to $0,57 and $0,52 per litre respectively.

“Currently, pump prices are higher than those obtained using the December 2014 FOB prices as companies are claiming they are still disposing of old stocks bought much earlier. We have given them two weeks to slash their prices, failure to do so will result in action I am not willing to disclose now,” Undenge said.

On Thursday, the price of Brent crude oil fell below $50 a barrel, from $110 in June last year — resulting in most regional countries pegging their petrol and diesel prices around $1,10 a litre.

Undenge said the delayed response to international oil prices by local dealers had spurred a “justified” public outcry.

He added that the proposed new retail prices were the ceiling prices, and operators could charge prices lower than the $1,20 and $1,32.

“To get to the pump price, the wholesaler and retailer are each allowed a maximum of seven percent mark-up, but are encouraged to take a lower percentage to encourage competition.

“Effectively, the price is deregulated and government would like to maintain a deregulated fuel price regime as it has worked well for us to date,” he said.

He said the government did not want to enforce price regimes, but still “urged” operators “to comply” with his directive.

“A befitting response is to adjust product price in reasonable time, this has not been the case in respect to our fuel prices… be that as it may, it calls for my intervention to quicken the response time,” the minister said.

Rosemary Siyachitema, the executive director of the Consumer Council of Zimbabwe, said earlier this week that responsible authorities needed to act on the issue immediately to ensure that consumers benefited 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.Govt moves to slash fuel prices

Comments (1)

Fuel should be costing far much less even below the dollar mark. However because many business are that are operating are linked to the ruling party since that the trend in almost every african country inparticular Zimbabwe. If the retailers refuse nothing will be done about them. The same retailers have never kept the fuel low stating that they are finishing the old stock. When they are to slash prices they argue that the procurement was done at higher price hence need to recover. That is nonsense and borders on cruelity. Fuel prices have been fluctuating ever since. In Zimbabwe considering that the land is almost price less, the cost producing ethanol is low. Hence after blending the price was supposed to have dropped significantly, but insteady with complusory blending it even went up on the bases of world prices of crude. Now the is a reverse, the same arguement is not holding water but fuel retailers are argueing on stock prices. The research was limited. They should have considered the profits margings based on real cost of procuring and landing cost excluding the cost that are self deriven like administration and distribution. Those should be absorbed by the 7% stipulated by government. In SA unleaded fuel cost R11.02, thus below $0.92. With blending which makes fuel of lower quality it should be around $.86 in Zimbabwe.

ananian - 12 January 2015

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