By Idah Mhetu
THE price of petrol went up by $0.84 cents, Saturday a few days after Finance Minister Mthuli Ncube indicated he would be comfortable with an increase that will bring the precious liquid’s value per litre at par with US$.
It is the fourth increase inside six months with the first being a 150% jump in January announced by President Emmerson Mnangagwa triggering violent protests that forced the government to deploy the military. Live ammunition was used to quell the disturbances leaving at least 17 people dead.
The Zimbabwe Energy Regulatory Authority announced on its Twitter handle late Friday that the price of petrol had gone up to $6.10 from $5.26, way below Ncube’s expectation.
The Treasury chief however indicated that Zimbabwe would not allow the price to jump to regional averages in one swoop.
“The price of fuel is likely to go up, I think what will be ideal is the price of fuel is close to or equivalent to a US$1. That’s the ideal. If you look around the region, that’s the ideal. So we will also get there, but we won’t get there in a big bang. It has to be gradual, not a big bang as long as we hold the exchange rate,” Ncube said.
There was no indication that diesel and other fuels had also had their prices adjusted upwards. There were two increases between May and June.
In June alone, a total of 75 million litres of fuel was consumed at a subsidised foreign currency cost, which, according to insiders, cost government and exporters $300 million.
It means even at the current price government continues to subsidise consumers at a time President Mnangagwa has declared market forces must decide prices of all goods and services.
The inter-bank rate between the local currency and the US dollar currently stands at US$1 to plus or minus $10. The parallel market rate that had threatened to plunge the country into chaos before government moved in to ban the multi-currency regime dominated by the US dollar is also not too far behind.
The price disparities, which make Zimbabwe’s fuel the cheapest in the region, have seen massive leakages into the black market and foreign markets. Government has however moved to plug these by introducing an electronic tracking system for all fuel delivery trucks and selling points.
“You will see the fuel price adjust to equilibrium one dollar. The reason of this subsidy to the economy is you are most aware that the arbitrage opportunities, that were there before, have crumbled.
“I wonder now if people again are starting to sell fuel to Zambia, you drive a truck here and fill up a truck…people take advantage of these arbitrage opportunities, but we want to tighten the management of fuel. We are going to launch an electronic dipstick,
basically some technology which allows to monitor the fuel usage at fuel stations,” Ncube said.
The increases could trigger another wave of price hikes given that fuel and power are major cost components in production.