Fuel prices slump further

By Owen Mandovha

The Zimbabwe Energy Regulatory Authority (ZERA) has further reduced fuel prices for the third consecutive week, in a development expected to have a positive effect on the cost of living and the economy in general.

This Tuesday, the Zimbabwe Energy Regulatory Authority (ZESA) released a new price schedule, with petrol stations now allowed to cap their prices at US$1.60 per litre down from US$1.78, while the price of diesel has been reduced to US$1.74 from US$1.88 just over a month ago.

The sustained price reduction is following the trend on the global oil market where a barrel that costs US$140 almost two months ago is now hovering below US$100 as global markets are showing a slight semblance of settling.

Chairman of the Consumer Protection Commission Dr Mthokozisi Nkosi is convinced the trend is good news for the consumer.

“Prices have been on an upward trend for the last couple of weeks owing to a number of reasons, but obviously fuel was a dominant cost factor. The price reduction of fuel recorded for the 3rd straight time are a good reason to smile for both motorists and the consumer. So, we don’t expect prices to increase either,” he said.

Confederation of Zimbabwe Retailers President, Dr Denford Mutashu notes that this is no small feat from a consumer perspective given the impact of fuel on the cost build-up of products.

“Retailers and manufacturers remember pass costs to the final consumer when production costs rise.  In a similar fashion the opposite should happen so that consumers can enjoy this price reduction in fuel.”

Economist, Mr Titus Mukove noted that if sustained, the trend will reduce inflation as prices will remain constant.

He said, “It shows a local economy that responds to global trends and the economy should also benefit in possible forex savings. On the other hand, the price of diesel is ordinarily lower compared to that of petrol but the opposite is obtaining which shows the positive impact of blending to reduce fuel prices.”

Energy prices across the world have spiked since the beginning of the year which triggered a wave of prices increases due to the impact of imported inflation on imported key products.

However, the regulator has been reviewing the prices to reflect changing dynamics to the benefit of consumers and motorists.