Fuel dealers slash prices

HARARE - Local fuel dealers started slashing fuel prices yesterday to meet government’s recommended fuel prices of $1,32 for petrol and $1,20 for diesel per litre, as the global oil price further slumped this week to $46 per barrel.

A snap survey conducted by the Daily News showed most dealers had started to comply after Energy minister Samuel Undenge threatened unspecified action if dealers failed to reduce petrol and diesel prices by today.

The global oil price has slumped by more than 50 percent, extending the second-deepest rout on record.

Sakunda Service Station, recently acquired by Dutch multinational oil trader, Trafigura, had complied, while some dealers like Total service stations stuck to the high retail prices.

At Total, the pump price remained at $1,49 and $1,39 per litre respectively.

Undenge last week told a news conference that in June 2014, the Free on Board (FOB) prices at Beira were at $0,88 per litre for diesel and $0,86 for petrol.

However, these had gone down to $0,57 and $0,52 per litre respectively as at end of December 2014.

“We have given them (fuel traders) two weeks to slash their prices, failure to do so will result in action I am not willing to disclose now,” Undenge said last week.

“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.”

While the two-week grace period expires today, most dealers are expected to comply with government’s directive.

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,” Undenge said.

“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 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.

Comments (10)

Good move minister. Why do they have to wait to run down their current stock only when the prices are to go down. When there is a price increase they will not wait until they replenish their stock. Moreover they will still make a profit at $1.32 assuming they bought it at an FOB price of $0.88/L

Zororai - 14 January 2015

1.32 is still too high. It should go down to as low as 1.20

chirume - 14 January 2015

Hats off Hon Minister Undenge for such a commendable move, in a space of time since you assumed the high office, we are beginning to benefit from your honest and effective leadership. May our God continue to guide and protect you. Well done to the fuel dealers who have started complying with the Gvt's directive, together we can make Zimbabwe a better place. This is a historical achievement in Zimbabwe to experience such a significance fuel drop! surelly the Lord is with us

S. A Munetsi - 14 January 2015

Hats off to Minister Mzembi for making the wake up call to Minister Undenge

Mutema - 14 January 2015

Prices are not to levels as prescribed by the Minister. Fuel dealers are ripping the nation off. If we look at the global oil prices, they hovered around $115/barrel for a while before receding to $85/barrel. Local prices then should have come down to about $1.32 for petrol. Global oil prices have gone down further from $85 to the current $49/barrel. If they stabilize at these levels, petrol price should come down to about $1. We implore the Minister to act on these selfish profiteering fuel players. Is it the part of importers or on the part of retailers? The minister must use legal instruments at his disposal to revoke licenses of non compliant fuel players

Tawa - 15 January 2015

price should go down further, 1.32 is still to high. Pump price in SA a week ago stood at $1.00 - 1.10 so we hould not be charger higher than 1.20 atmost. A price regime i the rational option because it serves the interest of the consumer and stimulates competition and an increase in standards

Arthur - 15 January 2015

Prices seem to have gone down by around 10c per litre. That is less than an 8% reduction. I thought they were told to reduce by 20% by the Minister. Seems he is not being taken seriously by the fuel sellers.

Peter Morison - 15 January 2015

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