Fuel price grossly inflated

via Fuel price grossly inflated – The Zimbabwean 27/01/2016

A year ago the price of crude oil was over $115 a barrel. A few days ago, the price fell to below $28 a barrel. This is a decline of $87 a barrel or 75 per cent. In Zimbabwe fuel prices at the pump a year ago were at an average of about $1.40 a litre or R16 per litre in South Africa.

Currently, average fuel prices in Zimbabwe are about $1.20 a litre, a decline of just 14 per cent and in South Africa prices are hovering about R10 per litre – a market decline of nearly 40 per cent despite a 30 per cent devaluation in the Rand. In other words the fall in prices in the South African market has been more or less in line with global trends. That is not the case in Zimbabwe.

Consumers looking around them will have noted the many millions of dollars being spent on refurbishing old filing stations, new pumps, new signage, forecourts, gardens and more – all signs that the stark decline in the domestic economy has not affected retail distributors of fuel products.

During the Government of National Unity the Ministry of Energy came under the control and management of the MDC-T and during the fours years that the Party was in charge, not only was the petroleum industry completely reorganized but the Ministry insisted on competition between bulk suppliers and the wholesale and retail industry in Zimbabwe. The result was that liquid fuels were brought into free supply at market prices and the benefits to the consumers were immediate.

Competition ensured that suppliers were forced to limit their margins on sales and to compete with each other in an open, well regulated market.

Since the Zanu PF regime resumed control of the Ministry of Energy in 2013, the Ministry has been characterized by incompetence, mismanagement and corruption. In addition unscrupulous traders, many with dubious reputations have taken control of the industry and margins and profitability have increased dramatically at the expense of the consumer. It is time the Minister of Energy gave a clear and honest explanation as to why prices in Zimbabwe remain so high and what he is doing about the issue.

Consumers need to be reminded that a cent a litre at the pump in Zimbabwe is equal to $16 million dollars a year – a 60 per cent reduction in the pump price would put $840 million dollars back into their pockets. That a small handful of companies should be allowed to milk the local market and consumers of this sort of money is a disgrace. But then we have come to expect this sort of behavior from Zanu PF.

Only real change will make a difference.

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