GOVERNMENT has hiked fuel prices by 150% and also formally gazetted US Dollar prices for the scarce liquid, as the nation continues to move towards redollarisation, setting the stage for another wave of basic goods price increases.
By Fidelity Mhlanga
In a circular on Tuesday night, Zimbabwe Energy Regulatory Authority announced that a litre of diesel now costs $62,77 from $24,90 or US $1,09 per litre.
The petrol price per litre has increased to $71,62 from $28,90 or US$1,28 per litre.
The new prices were announced a few hours after the central bank abandoned the fixed exchange rate of US$1: $25 and adopted a forex auction system, which set the official Zimbabwe dollar exchange rate to the US dollar at US$1:$57.36.
Surprisingly, it is the cost of ethanol that is driving the price of fuel high. Zimbabwe introduced mandatory blending to contain the price of petrol, but at $54,5763, the price of ethanol is contributing 76% to the final petrol price.
In addition, Zera prices published on Tuesday do not add up, as there is a variance of $14 on the price of diesel for example.
No immediate comment has been offered by Zera so far.
Zera has set stage for fuel dealers to ditch selling in inflation ravaged Zimdollar preferring hard currency.
The increase in fuel prices and the subsequent promulgation of USD prices has evoked questions as to whether this will mark the end of fuel crisis in Zimbabwe.
The fuel shortages which has been eminent in the market for years worsened the past weeks as motorists waited for days in long winding queues.
The government has often pledged to end the fuel crisis, but has not done much in delivering on this promise.
Fuel prices have been going up regularly over the past six months, but this is the biggest increase since January 2019, when a round of increases sparked protests.
In April, in response to falling world oil prices, Zera promised that the fuel prices will come down, instead, the government increased US dollar prices for petrol and diesel by almost 30%.
Listed companies in their financial reports have continuously bemoaned the crippling effects of fuel crisis in their operations which has increasingly become an albatross to the ease of doing of business in Zimbabwe.
War veterans’ leader and a former advisor to President Emmerson Mnangagwa, Christopher Mutsvangwa has in the past blamed Kudakwashe Tagwirei for the high fuel prices.
Tagwirei runs Sakunda, one of the big fuel industry players in the country.