BY TATIRA ZWINOIRA

The increase in the FOB prices on petrol and diesel shows government’s high fuel cost build-up structure.

FOB prices are determined by market forces, but can be regulated by a government, but since Zimbabwe has a plethora of charges in the country’s fuel cost build-up, any increase translates to a rise in fuel prices for motorists.

The charges in the fuel cost build-up, besides FOB prices, include freight, duty, Zimbabwe National Roads Authority road levy, carbon tax, debt redemption, strategic reserve levy, and storage charges.

Motor Industry Association of Zimbabwe president, Simplisio Shamba attributed the increase in prices to the FOB price.

“On January 1, diesel (Diesel-50) was $0,5799 and petrol $0,5453, on January 8, diesel (Diesel-50) was $0,5865 and petrol $0,5520 and as from the January 15, diesel was $0,5949 and petrol $0,5614,” he said.

“So those are the issues that determine the price of fuel, which is just slotted into a costing module and then the price comes out. My comment would be it is a work in progress. We met the minister (Energy and Power Development minister Simon Khaya Moyo) last week, where we discussed the issue and he assured that something is being done.”

Last Friday, the price of petrol was an average of $1,39 to $1,40, with Diesel-50 averaging around the same price.
As of Monday, the price of petrol went up to $1,41 together with the price of Diesel-50.

The high cost build-up has made regional fuel prices relatively cheaper compared to Zimbabwe, despite the FOB prices going up in other neighbouring countries.

The diesel FOB price is more than petrol because it is transported by road and not through the pipeline, making it more expensive.

At the time of going to print last night, Zimbabwe Energy Regulatory Authority chief executive officer, Gloria Magombo had not yet responded to questions sent by NewsDay seeking clarity on the increase.

There are fears the increase in the price of fuel could lead to an increase in prices of basic commodities, as manufacturers and retailers often pass on the costs to consumers.

The impending increase comes as President Emmerson Mnangagwa has set up a Zanu PF politburo taskforce to deal with price increases on basic commodities and multiple pricing structures. The committee is chaired by Vice-President Constantino Chiwenga.