Zim defends high fuel prices

HARARE - Zimbabwe's government has defended high fuel prices obtaining in the country despite a significant decline in international oil prices by more than 70 percent in the last few months.

Energy minister Samuel Undenge last week said the country uses “a unique” pricing model that is different from other countries and does not react quickly to fluctuations in global oil prices.

“Comparing fuel prices in Zimbabwe with those obtaining in other countries will produce different results because we do not use the same fuel pricing models,” he said in a paper presented to Parliament last week.

Fuel prices in the country are set through a fuel pricing model agreed to between the Energy ministry, Zimbabwe Energy Regulatory Authority and oil companies.

The model sets the maximum pump price permissible, after taking into account all the costs of doing business in the fuel sub-sector. The costs include taxes and levies that go to government.

Undenge said fuel prices comparison would only be useful if the Zimbabwean pricing model was similar to the pricing models of other regional countries.

This comes as oil prices on the international market have declined from $123 per barrel in August 2014 to less than $30 per barrel last week resulting in regional countries such as South Africa and Zambia slashing their petrol prices from an average of $1,40 per litre to less than $0,75 per litre.

But in Zimbabwe, petrol is retailing at an average of $1,28 per litre while diesel is going for an average of $1,05 per litre.

This has prompted a number of motorists to voice their concerns over government’s failure to ensure that they enjoy low fuel prices, which have a multiplier effect of lowering consumer goods in the country.

Undenge, however, conceded that some fixed cost elements in Zimbabwe’s pricing model and government taxes were making local fuel prices among the highest in the world.

“The current maximum pump price for diesel is $1,05 per litre. If we take out the government charges and pumping fees per litre, we remain with 58,8 cents.

“This 58,8 cents covers the ex-Beira purchase price, storage and handling, internal distribution and the margins for the oil companies and the dealers,” he said.

The Energy minister also noted that taking out the government charges and pumping fees from the current price of petrol leaves 63,7 cents for the remainder of the cost elements on the pricing model.

“Even if we were to be given fuel for free, given the costs of pumping it into the country, the duties and taxes, storage fees, distribution costs, the pump price of petrol would be 86 cents per litre and that of diesel would be 71 cents per litre.

“This helps to demonstrate that although local fuel prices respond to movements in the crude oil prices, there is a limit to the extent to such response,” he added.

Comments (14)

THIS is BULL SHIT THE MINISTER IS A REAL A HOLE

ALEXIO - 16 February 2016

THIS is BULL SHIT THE MINISTER IS A REAL A HOLE

ALEXIO - 16 February 2016

The Minister is trying to sound educated here but in reality he is a bafoon!

Mudhiniwe - 16 February 2016

This minister has say absolutely nothing. Peg the petrol at 86c and diesel at 71c. Why not

s shumba - 16 February 2016

And to really think this man is a Dr Undenge, my foot !!!

Dd - 17 February 2016

The challenge on the pricing of fuel is not a pricing model, but the ownership of fuel companies in Zimbabwe. If the companies that are selling fuel in Zimbabwe, were not ZANU PF owned then there would be a spontaneous reduction or response of reduction in fuel price. If the these companies regardless of the price model this pathetic guy is alluding to increase, there will be an immediate hike in prices. The matter is they ZANU PF cronies are profiteering at the the expense of Zimbabwean docile population. Its a government not responsive to their hapless population. What ever model of pricing once the input cost changes there must be an chain of responses otherwise that costing model is wrong.

amina - 17 February 2016

he is a clown,we are tired of clowns in zimbabwe.reduce price of fuel now

cliff maringauta - 17 February 2016

......the model is used only on regusing prices,but on hiking its not used kungonzwa kuti yakwira oil chero yangayatove ppa flling station yatokwirawo,zvikanzi yadzika heeelleee kushingashinga iriipapo kwotaurwa zvaana pricing model,you can not build the country;s economy by squizing the the citizens,make up a plan minister kwete kungosvina maZimbabweans. Otherwise step down for the benefit of this country

peacemaker zano - 17 February 2016

Heartless government lead by heartless people to hell with this CRUEL government....!!!!

F. Kamunda - 17 February 2016

THEY ARE IN A DEAL WITH PETROLEUM COMPANIES TO RAISE AS MUCH MONEY FOR ELECTIONS AS POSSIBLE. Metrics: 1 Barrel is equal to 158litres thus 1 litre costs US$0.19 Add Levies and Taxes US$0.61 Landing cost US$0.80 Add: Wholesalers' profit US$0.07 = US$0.87 Add: Retailers' profit US$0.07 SPP = US$0.94 for petrol THESE CHIEVES ARE GETTING US$0.28 for every liter sold, I will not vote them: This is being used for - Civil servants - Elections - Indeginaition - Repay RBZ loans - Capitalise ZAMCO - Robert's flights - Civel Servants - Bonusses - Partliament's seats etc ko yeToll Gate Ko yeZIMRA ko yeCustoms and Duty plus Rolyaties for Diamonds etc UHM BITI WAS Right... Mujuru urikuzvion ka izvi, takakupinza mupower usatoita zvaJeroboam, zvokurova neshamu THIEVES! MUJURU WILL CORRECT THESE DISPARITIES.

VIVA MUJURU - 10 March 2016

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