HomePoliticsFuel dealers reject new prices

Fuel dealers reject new prices

Vincent Kahiya

INDIGENOUS fuel dealers have rejected new prices announced by government this week as uneconomic and vowed to sell petrol and diesel at rates determined b

y supply and demand.

Energy minister Amos Midzi on Wednesday said the fuel sector had been deregulated – giving marketers the green light to import fuel but requiring them to sell it at stipulated prices of $1 170 a litre for petrol and $1 070 for diesel.

The minister said the National Oil Company of Zimbabwe would continue to sell petrol and diesel to public transporters and government departments at $450 and $200 a litre respectively.

The long-awaited policy, touted as the panacea to the country’s four-year fuel crisis, however appears to have compounded an already precarious situation.

The dealers yesterday said the prices set by the government did not make business sense as they did not take into account the problems of procurement amid foreign currency rate volatility.

The dealers, who have been selling petrol at about $1 800 a litre, said they had kept the country’s fleet rolling after government abandoned fuel procurement due to forex scarcity at the official exchange rate.

The government on Wednesday said it had increased the price of fuel from the gazetted prices to the new rates to encourage private imports and boost supplies.

“It is actually criminal for the government to say it has increased the price of fuel to $1 170 a litre because motorists have for the past six months been buying the product at above $1 500,” said an executive with one fuel company.

“We are not party to that arrangement because it does not make business sense for us to import fuel and sell it at a loss.”

The dealers said government was landing fuel in the country at about US39c a litre while indigenous marketers have been landing the commodity at about US35c a litre. At the black market rate of $5 000 to US$1 the prices translate to $1 950 and $1 750 respectively for petrol and diesel. The pricing structure proposed by government assumes a foreign currency exchange rate of about $3 000 to US$1 which is still way above the prescribed rate of $824:US$1.

The government has over the years kept the pump price of fuel low through subsidies.

Petroleum Marketers Association of Zimbabwe chairman Masimba Kambarami said the only positive aspect about Midzi’s announcement was the decision to open the fuel sector to competition. He said there was a trigger mechanism in the pricing system which allowed for adjustments in the event of movements in variables such as offshore prices and the exchange rate.

“But we do not want the price to be changing all the time,” said Kambarami. “There should be stability in the prices. We will be talking to the banks soon to get a reasonable rate.”

Asked when fuel would be available at service stations which have been closed for over six months, Kambarami said fuel would start trickling in today.

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