By Eben Mabunda
The Organisation of the Petroleum Exporting Countries (Opec) and non-Opec partners, a group collectively referred to as Opec+, at the beginning of October indicated that it would stick to its existing pact for a gradual increase in oil supply.
Prices are expected to inch upwards and be moderated by supply management with strong indications crude prices could be poised to rally toward US$100 a barrel. For a country like Zimbabwe, such a trend points towards more upward fuel price cap revisions by energy regulator, the Zimbabwe Energy Regulatory Authority (Zera).
UK and European gas prices surged as much as 18% on Monday following a much-awaited pipeline capacity auction showed no increase from Russia either through the Ukrainian pipeline system or lines passing via Poland to northwest Europe. In India, fuel prices are at an all-time high across its major state capitals.
The international market is witnessing a record surge in oil prices in October, as demand recovers post the Covid-19 pandemic slump. Oil trimmed on Tuesday but remained near multi-year highs as an energy supply crunch continued across the globe while falling temperatures in China revived concerns over whether the world’s biggest energy consumer can meet domestic heating needs.
A key driver behind Zera’s upward price review has been shifts in oil market dynamic changes. Global supplies are and will continue to be held back by Opec’s 400 000 barrel per day supply cap, a limit reviewed monthly based on Opec’s demand forecasts in markets around the world.
Empowered by Zimbabwe’s Statutory Instrument 90 of 2021 under the umbrella of the Petroleum Act’s Section 54, Zera now controls local liquified petroleum gas (LPG gas) prices.
This October, Zera increased the prices of both diesel and petrol by between 1% to 6% in both local and foreign currency. In foreign currency terms, diesel and petrol prices went up by 3% and 1% to US$1,38 and US$1,40 from US$1,34 and US$1,38 in September respectively.
Notwithstanding Zera prices are way above regional counterparts like Mozambique, the Democratic Republic of Congo, Lesotho, and Namibia whose petrol prices range between US$0,95 and US$1,05, owing to excessive taxes being placed on fuel by the local government. Zera’s fuel price reviews expected in early November are likely to register an increase in line with global fuel trends. This will probably have an inflationary effect on the overall economy on the back of the increased cost of doing business across the nation.
Zimbabwe’s annual inflation ticked up in September, ending 13 months of easing as the Consumer Price Index (CPI) closed September at 52%, which is 2% higher than August’s 50% outturn. The government is now targeting annual inflation to close the year at between 35-53%. IMF‘s inflation projection for Zimbabwe is within the government’s range at 41% by year-end and further down to 23% by end of 2022.
Ahead of COP26 — November 2021’s upcoming UN Climate Change Conference — a new IEA report urges rapid action to achieve net-zero carbon emissions and identifies a key role for modern bioenergy in this transition.
Zimbabwe just over a fortnight ago committed to reducing carbon emissions by 2030. The new target is for Zimbabwe’s total greenhouse gas emissions to be curbed to 44,7 million tonnes of carbon dioxide equivalent (Mt CO2e) by 2030. If no action is taken emissions are projected to hit 75,4 Mt CO2e by then. Emissions in 2017 were 35,84 Mt CO2e, according to the NDC’s most recent national-level estimate.
Looking ahead, there is a need for Zimbabwe’s active involvement to engage with international energy regulators and industry experts to independently evaluate Zimbabwe’s energy sector conditions and map out a way forward to address recurring electricity supply challenges and the under-performance of independent power-producing companies — both from regulatory and operational perspectives.
- Mabunda is an analyst and TV anchor at Equity Axis, a leading financial research firm in Zimbabwe. — firstname.lastname@example.org