The Sunday Mail
Zimbabwean motorists will only save USc1 for every litre of ethanol-blended petrol purchased following Government’s recent increase of mandatory ethanol blending of petrol from 15 to 20 percent.
While falling international prices of crude oil have brought marginal relief, the increase in the ethanol blending ratio will not make a significant dent on local petrol prices.
With a litre of petrol selling for between US$1,30 and US$1,38 at service stations, the cost of fuel in Zimbabwe remains the highest in the region. The minor price shift brings little relief to private motorists and industry who anticipated tumbling petrol prices prior to the introduction of mandatory blending in 2013. In March, Government reduced the blending threshold to five percent following depressed ethanol production.
It was increased to 10 percent last month and now stands at 20 percent. In emailed responses to an enquiry from The Sunday Mail recently, Zimbabwe Energy Regulatory Authority CEO Engineer Gloria Magombo said further changes to ethanol production levels may prompt a review of blending thresholds.
She said the marginal fall in fuel prices in recent months was largely a result of slumping international prices of Brent crude.
“The Ministry of Energy and Power Development has the prerogative in terms of Section 4 of the Petroleum (Mandatory Blending of Anhydrous Ethanol with Unleaded Petrol) Amended Regulations, 2014 (No 2) to adjust blending levels,” said Eng Magombo
“The adjustment followed increase in availability of ethanol from the producers.
“Increase in ethanol blending resulted in prices dropping. It had an effect of price reduction of one cent per litre.”
Blending was made compulsory following completion of the US$600 million Chisumbanje Ethanol Plant, a joint venture project between Agriculture Rural Development Authority and Macdom and Rating Investments that saw formation of joint venture company Green Fuel.
Hippo Valley’s Triangle Estates is the other major supplier of ethanol in the country.
Said Eng Magombo: “At (Green Fuel’s) current declared levels of production, the company does have the capacity to supply the required ethanol requirements.
“Any changes in production levels may require changes being done to augment supply or review blending levels by Government.
“The reason for the drop in fuel prices in Zimbabwe is because of Brent Cride Oil prices that have also been going down during the same period.
“Since third quarter 2016, Opec has been putting efforts towards curtailing production as a strategy to boost prices.
“So far, the measure has not yielded the desired upward movement of prices as non- OPEC countries have produced more.
“Zera will continue to monitor the movements to ensure that the motoring public as well as the economy at large benefit from the reductions.”
Eng Magombo said all operators were expected to charge prices according to Zera-determined limits.
The pricing structure comprises the FOB (external price), transport costs, Government taxes and levies, administrative costs, distribution costs and different margins due to wholesalers and retailers. FOB specifies the point at which the seller transfers ownership of goods to a buyer. Zimbabwe gets fuel at Beira, Mozambique at an FOB price ranging between USc63 to USc62 per litre. Licensed fuel importers source fuel through agents in the United Arab Emirates, Belgium, Singapore, the United States, Switzerland, China, Cyprus, Germany, France and the United Kingdom. Zimbabwe requires an average 1,5 million litres of petrol a day, and Cabinet reviews the maximum fuel price in the country every fortnight.
