PRESIDENT Mnangagwa has directed the Government to enforce domestic remedies, including a reduction of duty on petroleum products, to control the price of fuel which went up last week on account of geopolitical factors caused by the Russia-Ukraine conflict.
These fresh interventions have seen the Government
forestalling another price hike.
There has been a sharp increase in local fuel prices in the
last fortnight after the international price for a barrel of oil increased to
an average of US$130 from about US$95 since the conflict began.
Locally, fuel prices increased twice by a about US$0,30c
inside a week, leaving diesel and petrol selling at US$1, 68 and US$1, 67 per
litre, respectively.
As such, players in the energy sector have raised alarm
over the surge saying the knock-on effect could be harmful to the recovering
economy.
In an article in this edition, President Mnangagwa called
for calm saying Government has taken measures to shield the economy from the
global disruptions.
“We are looking at the whole duty framework to cushion our
economy from shocks and pressures from galloping fuel prices,” he said.
“There is no need for panic. I have already directed the
Ministry of Energy and Power Development to review and reduce duty and
surcharges on fuel so the pump prices of petrol and diesel remain manageable.”
The President said Cabinet will soon deliberate on
sustained implementation of the measures.
“We need stability in the fuel market so we minimise
imported inflation for price stability in the economy. Cabinet will be seized
with this issue in days and weeks ahead.”
As of March last year, Zimbabwe’s total taxes and levies on
diesel and petrol amounted to about US$0,30c per litre.
In an engagement with players in the insurance sector on
Wednesday last week, Finance and Economic Development Minister Professor Mthuli
Ncube said the Government was already in the process of reducing fuel taxes.
“The geopolitical developments pose a risk to our economic
recovery. These are what we typically call global spill overs,” he said.
“The channels of transmission of such global spill overs is
through the oil price and we have seen the price of local fuel move to US$1, 68
per litre because of that movement of the FOB (Fuel on Board) price, which is a
direct translation of the global oil price.
“It’s not easy to come up with risk mitigation measures,
but one thing we have done is to lower the taxes on fuel from about 12,7 cents
(US) to 8,7 cents (US), and that’s where we are now.”
Prof Ncube said the Government is looking to reduce the
taxes further.
“We could lower it further, but it’s difficult to get to
zero because we have pressures as Government, such as civil servants’ salaries
and so forth,” he said.
“By the way, we have been doing that without you noticing
since September (2021).”
Energy and Power Development Deputy Minister Magna Mudyiwa
yesterday told The Sunday Mail that her ministry has heeded the President’s
call.
“It’s true that our fuel prices are among the highest,
especially in the region due to some domestic taxes and duty. The reduction of
these (duty, tax and surcharges) will definitely see our fuel prices
significantly going down.
“We will be reviewing the situation and provide further
information in due course.”
In a statement yesterday, the Zimbabwe Energy Regulatory
Authority (Zera) said Government in consultation with players in the petroleum
industry last week forestalled another price hike.
“The fuel prices continued to increase during the past
week,” reads the statement.
“Pump prices were supposed to increase but after
consultations with the Government and industry, it was agreed to maintain the
current prices while monitoring market developments.
“The public and operators are advised that the blending
ratio remains at E0 (Ethanol 0). Operators may sell the petroleum products
below the prescribed prices depending on their trading advantages and should
display prices in a prominent place as provided for by the fuel pricing
regulations.”
Confederation of Zimbabwe Industries (CZI) president Mr
Takura Matsheza said the obtaining fuel hikes have hit industry hard and are
threatening ongoing economic recovery efforts.
“It’s a very difficult situation for us as industry and the
Government as well because they depend heavily on taxes from the energy
sector,” he said.
“But at the moment it appears that there is no other way
than to reduce taxes and levies to protect the economy as a whole and we have
already made this proposal to Government.”
In a positive development, the prices of precious metals
like gold have gone up.
President Mnangagwa said the fact that Zimbabwe produces
some of these precious metals means the Government can leverage on their
firming international prices to minimise economic shocks.
“As I write, prices of key minerals which Zimbabwe has and
offers to the world, are firming up on the world market. Gold is creeping
towards US $2000 an ounce; palladium which is part of our PGMs is well above
US$ 3000; the price of platinum is firming daily, pointing to bright prospects.
“Lithium, already enjoying a pride of place because of the
seismic shift to green economies, can only bring rich rewards to our economy.”
President Mnangagwa said investments in chrome, tin and
iron are also on an upward trend.
“Diamonds are holding their own, in fact rising. My recent
meeting with representatives of the World Diamond Council in Brussels showed a
great appetite for our parcel,” he said.
“Soon our Zimbabwe Consolidated Diamond Company will be in
the market with several parcels.
“All these good auguries in the mining sector make our
USD$12 billion target realistic and achievable by 2023 if not much earlier.”
Sunday Mail
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