Locals divided over international fuel prices knock
BUSINESS REPORTER
Petrol prices are currently ranging between $1,53 and $1,58 per litre, while diesel costs between $1,43 and $1,45 per litre.
Fuel retailers yesterday told NewsDay that they would cut fuel price by an average 3 cents a litre in response to the slump in the crude oil prices on the international market.
Zimbabwe Energy Regulatory Authority (Zera) chief executive Gloria Magombo yesterday confirmed the impending price reductions.
“The prices are going down,” Magombo confirmed. But she could not give more details as she said she was about to get into a meeting.
But an executive in the petroleum sector said the impact of the reduction in crude oil prices would take a bit of time as oil companies were taking time to adjust fuel prices to retailers.
“The reduction in the prices of crude oil will take a few weeks as the price reductions are in the Persian Gulf. It is a long chain in terms of logistics. It is the oil companies that interact directly with the suppliers. It is the oil companies who are to first reduce the prices and then the fuel stations,” the petroleum executive said.
The executive said the fuel market had been liberalised and hence, there were no uniform prices in the market.
“In remote areas, the price of fuel will be expensive because of logistics and the volumes, while in some places that are close to town, it will be cheaper,” he said.
Market analysts this week said Zimbabweans might not enjoy the full impact of the reduction in crude oil prices due to mandatory blending and general indiscipline in the sector.
Petrol sold in Zimbabwe must by law be blended with 15% ethanol.
The price of ethanol in Zimbabwe has remained constant as it is unaffected by the price of crude oil.
Local oil companies also use the M-1 formula in product procurement which delays the knock-on effect of international price reduction in the local retail market.
An analyst also said indiscipline among local retailers had seen service stations selling diesel blended with cheaper paraffin in order to maximise on profits.
“The price of diesel may come down, but there is a real possibility that a lot of what will be sold on the market will be laced with paraffin which costs much less than diesel,” the analyst said.
The average international price of Brent crude oil fell by around $7,0 per barrel (bbl) from an average of $87/bbl to the current level of $80/bbl.
Since mid-June, Brent oil prices have fallen by more than 30% with panic over abundant supplies in the world economy as a result of a rise in output from shale oil and other unconventional sources and a strong US dollar.
The average prices on petroleum products followed that of crude oil during the period under review.
In South Africa, petrol price decreased by up to 69 cents a litre, while diesel will cost 53 cents less starting this month.
The main contributing factor to the fuel price decreases was the continual drop in the crude oil prices, which fell to about $80 per barrel during the period October 31 to November 27 2014.
Meanwhile, Zera is working on the development of the Renewable Energy Policy and Action plan that will help establish market-oriented measures and regulatory instruments for the sector.
Zera said in a statement the consultancy would involve carrying out a background analysis, identifying and analysing regulatory and institutional barriers to renewable energy investment in Zimbabwe.
“The consultant will provide recommendations which can, within the current proposed energy market designs, provide a better basis for investment in commercially viable renewable energy technologies. The estimated period for execution of this assignment is 12 months and work is expected to commence in February 2015,” part of the statement reads.