The Sunday Mail
Sunday Mail Reporter
Petrol and diesel prices are expected to fall marginally by between US$0.03c and US$0.04c respectively in the coming weeks as local fuel prices respond to the decline of brent crude oil on the world market.
The Zimbabwe Energy Regulatory Authority (Zera) said this will see the prices of petrol and diesel decline from current averages of US$1.28 per litre and US$1.07 per litre to US$1.25 per litre and US$1.03 per litre respectively.
Zera chief executive officer, Engineer Gloria Magombo told The Sunday Mail last week that while there is a perception that local fuel prices have not been dropping, they are in actual fact dropping faster than most countries in the region.
“The regulatory cap prices of blend (petrol) will fall from the current levels by one cent per litre to $1.27 whilst diesel will fall by two cents per litre to $1.05c per litre during the week starting 1 February 2016.
“Thereafter, both diesel and blend will fall by a further two cents per litre to $1.03 and $1.25 respectively starting 8 February 2016,” she said.
Crude oil prices have been nose-diving for the past 18 months, reaching an all time low last week when a barrel sold for US$28 on January 22, 2016.
However, the effects have taken long to be felt in Zimbabwe, thereby leaving industry and motorists agitated.
Explaining the FOB (free on board) fuel pricing model, Eng Magombo said decline in the prices of crude oil does not translate to the same percent reduction in retail prices.
“The FOB prices as calculated for Beira declined in sympathy from an average of 63 cents per litre in June 2015 to about 46 cents per litre in January 2016. The drop in FOB translates to a 27 percent decline over the period,” she said.
“However, the decline in the prices of crude oil does not translate to the same percentage reduction in the FOB as there are processing costs, freight and other charges to be paid.
“The drop in FOB does not translate to the same margin of reduction in the final pump price as there are fixed costs in the price build-up which are defined in statutory instrument 80 of 2014.” According to a survey carried out by the Consumer Council of Zimbabwe (CCZ), prices of petrol and diesel have declined from US$1.43 and US$1.32 since January last year to US$1.31 and US$1.11 in January this year. CCZ deputy director, Ms Rosemary Mpofu said the trend is likely to continue on a weekly basis.
The pricing of petroleum products in the country is regulated through Statutory Instrument 80 of 2014 [Petroleum (Fuels Pricing) Regulations] as read together with SI 20 and SI 100, both of 2015.
The actual price cap set by the regulator using the same Statutory Instrument for pump prices declined from $1.54 per litre to $1.28 per litre for blend between June 2015 and 25 January 2016.
The prices for diesel declined from $1.37 per litre to $1.07 per litre in the same period, which translates to 21 percent fall for diesel and 17 slump for blend.
