The cut in fuel prices by 8 US cents a litre following Government tax cuts has been welcomed by businesses and motorists who have been feeling the pinch after prices rose swiftly following the big jumps in global crude oil prices.
The rapid rise in crude oil prices following global recovery from the Covid-19 pandemic and then the switches in supply chains as a result of the Russia-Ukraine conflict saw the retail prices in Zimbabwe rise to US$1,67 a litre for petrol and US$1,68 a litre for diesel.
The prices follow a formula that includes all costs, including the fuel duty, and maximum mark-ups for oil companies and service stations.
But following the intervention by Government, which promised to reduce the tax on each litre, a litre of petrol is now US$1,59 while diesel is now US$1,60.
In a statement on Sunday, the Zimbabwe Energy Regulatory Authority (ZERA) encouraged operators to charge prices lower than the capped price depending on their trading advantages.
“Prices have been set in accordance with oil price patterns on the international market, which the authority is continuously monitoring,” said ZERA.
“The public and operators are advised that the blending ratio remains at E0 (that is no ethanol). 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.
“Stakeholders are advised that the petroleum price released by ZERA can be verified on the official ZERA website, Facebook or Twitter handle.”
Motorists welcomed the new price announcement, adding that they hope the prices can remain stable.
Already Saudi Arabia, under pressure from major importing nations, has said it will pump more crude which global markets expect to stabilise crude oil prices, although at the new higher level.
While Zupco had maintained its fare structure, many in the grey and illegal public transport sector had been pushing up fares, quoting the price rises. The Zupco fleet is growing but is still not able to cope with the demand for public transport.
Ms Ruvimbo Makamadze, who is in the transport business, said the reduction of fuel prices definitely aids her operations.
“I am into transport and logistics and I was having a headache over the increase of fuel prices. It was affecting my operations but now I am relieved because the reduction of fuel prices means more business as some customers were no longer keen to hire my trucks due to cost adjustments.
“I would like to thank the Government for such a bold move and I hope the prices will remain stable,” she said.
Companies were finding it hard to maintain their costs at the same level and were passing the cost to consumers.
Confederation of Zimbabwe Retailers president Mr Denford Mutashu said they were happy with the new price structure.
“This is such a significant movement and should lead to a positive change in the value chain. This is also a positive response in the market and we are optimistic of price stability,” he said.
Motorist Mr Tapiwa Muthombeni said the reduction in fuel prices was a bold move that should see prices of a goods and services and transport costs coming down, bringing relief to citizens.
“This is a commendable move by the Government and we hope that the fuel price will not increase in the near future.
“Now we can fill up our vehicles without any worry or hesitation because the way the prices were increasing had become worrisome but we would like to thank the Government for intervening and making sure that the price is reduced,” he said.
A Harare resident, Mrs Ropafadzo Zhou, said she had resorted to using her car over the weekend only as she could not cope with the new fuel costs.
“The price reduction is a welcome decision because now I can fill up my car without any worry and when necessary drive it to work and take my children to school.
“I hope the prices will continue to fall for our convenience and those of the commuting public,” she said.
A commuter, Mr Kudakwashe Tafireyi, said the Government should ensure that transporters reduce their fares as soon as possible for the commuters’ benefit.
He added that there was need for Zupco to remain on the roads up to about 11pm since it is the only legal commuter transport available. In the past, Zupco and the two companies nationalised to form Zupco used to run limited late evening and all night buses, with high density suburbs getting a scheduled bus every two to three hours and with guards at terminuses to protect commuters waiting.
“This arrangement that Zupco buses stop ferrying people around 7pm is seriously affecting us because a lot of people finish work at 10pm.
“All these people will be at the mercy of private, illegal kombis and private cars which will be available at that time and depending on the number of people at bus stops, sometimes we pay US$2 for distances that Zupco charges as little as $120,” said Mr Tafireyi.