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Reduce fuel price for polls-govt

PETROLEUM Marketers of Zimbabwe (PMZ), under pressure from government, has ordered major fuel retailers to cut the price of fuel, as an increase would hurt government’s prospects ahead of an election.

face=”Verdana, Arial, Helvetica, sans-serif”>Fuel prices rose to an average $3 950 a litre this week from around $3 600 as the commodity tracked the weakening dollar against major currencies.

Government has for the past 14 months worked to tame rampant inflation, which in January last year peaked at 623%.

Inflation has been in free-fall since then, but figures released last week saw a slight reversal on the trend. Year-on-year inflation rose to 133,6% from 132,7%. Economic recovery has been the ruling Zanu PF’s rallying point in its campaign for the March 31 election. It is feared a rise in the price of fuel would further push inflation up.

Correspondence sent out by the PMZ to fuel marketers yesterday ordered them to immediately reduce the price to $3 600 a litre.

“Your actions of increasing the pump prices are, inter alia, contrary to central bank’s economic turnaround strategy and will tarnish government’s image ahead of the forthcoming elections,” PMZ said.

The PMZ also said the increase in the price of fuel would be “prolific to unprecedented price increases throughout our economy”.

Justin Mupamhanga, the Energy ministry permanent secretary, yesterday said government had launched investigations into the latest fuel price increases, which started early this week.

“We have heard that fuel has gone up,” Mupamhanga told the Zimbabwe Independent. “We want to assess the situation first then… we will make a formal position.”

Mupamhanga’s sentiments came as it emerged that the PMZ had chastised member organisations, pointedly multinational companies, for effecting unilateral fuel price adjustments.

It said “the responsibility” of reviewing fuel prices solely remained with PMZ and any such actions would negate government’s anti-inflation drive, and impair government’s image ahead of a crucial election.

The PMZ bosses directed fuel companies to maintain the current pricing regime, where a litre of petrol retails for $3 600 in the northern region and $3 800 in the southern part of the country.

They said “any defiance” of this measure would incur the full wrath of the law, with PMZ “dissociating itself from your actions (of increasing prices) by an immediate expulsion of your representative from its board, withdrawal of product allocations and in addition to any other common law remedies available”.

The PMZ said according to a multi-stakeholder December meeting attended by, among others, Policy Implementation minister Webster Shamu and Reserve Bank of Zimbabwe governor Gideon Gono, players in the fuel sector will stick to the current pricing regime until April 30.

Oil industry players said this week’s 8,3% increase had been necessitated by the high cost of foreign exchange to procure fuel. The US dollar is now trading at $6 050 on the controlled auction floor and $11 500 on the parallel market.

Zimbabwe, in the throes of a fuel crisis since 1999, consumes US$40 million worth of fuel a month, but prevailing hard cash shortages have affected supply.

The crucial fuel sector has only managed to obtain US$6-7 million a week from Zimbabwe’s central bank and Harare’s $6 200 rate to US$1 has not helped to encourage inflows of foreign currency.

The RBZ rejected 93% of foreign currency bids on its auction floors last month. This has resulted in fuel players, among other essential importers, turning to the expensive and unofficial black market to make up for the shortfall, thereby nudging prices of commodities. — Staff Writers.

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