Oil price fall: Good news for Zim

oil prices

Oliver Kazunga, Acting Business Editor
ECONOMIC commentators are upbeat that the economy stands a chance to benefit from the continued fall of oil prices on the international market.

For a long time, the global oil price has been on a downward trend reaching the 13-year low at $27,70 per barrel.

As a result of the price reduction, economic commentators are optimistic that the  country is likely to see the pump price declining further in the short to medium term.

Due to global oil price which has hit an all time low, fuel prices on the local market have declined marginally with blend petrol averaging $1,28 per litre from $1,38.

A snap survey by Business Chronicle yesterday showed that some of the filling stations in Bulawayo were selling petrol at $1,25 per litre.

An economic commentator, Trust Chikohora said fuel prices on the local market were expected to continue on a downward trend.

“Ordinarily, we should see the prices of fuel on the local economy falling but the government has of late had some tendency of loading some cost on fuel prices and as such consumers at the end do not benefit. For example, the fuel could have landed at the port at $0,90 per litre but because of the added costs, the fuel ends up being sold at $1,30 per litre,” he said.

“We just hope that as international oil price continue to fall, the local economy stands a chance to benefit from the price reduction,” said Chikohora.

Peter Mhaka, another economic commentator echoed similar sentiments adding that fuel was a major production input, which when its price increases or decreases, the economy would feel the impact.

“In light of the power challenges that the country is facing, we’re likely to see the use of diesel powered generators becoming relatively cheaper to businesses that are  using them as an alternative source of power during times of load shedding by Zesa,” he said.

Another economic commentator Wendy Mpofu said there was a need for the country to ensure that new power generation projects were developed to improve on the country’s power supply.

Over the years, the country has experienced erratic power supplies putting a dent on industrial recovery efforts.

The Confederation of Zimbabwe Industries (CZI), which represents the interests of the manufacturing sector, has cited intermittent power supplies as one of the major constraints deterring companies from improving capacity utilisation to competitive levels.

Last year, CZI highlighted in its manufacturing sector survey report that capacity utilisation declined from 36.6 percent in 2014 to 34.3 percent.

Due to lack of investment in power generation in recent years, Zimbabwe which requires 2,200 megawatts presently has a daily output of less than 1,300MW.

Yesterday, the Zimbabwe Power Company indicated on its website that the country is generating 840MW as Hwange Thermal Power Station’s output declined to 202MW following a technical fault over the weekend.

Before the systems disturbance, the country’s largest thermal power plant’s output was averaging 450MW.

As a result of ageing equipment, at Zimbabwe’s power stations, there has been constant breakdowns on the generating units resulting in increased load shedding which at times has gone out of the scheduled times.

Industries, at times, have resorted to alternative sources of power such as diesel powered generators which CZI has said increased production costs for companies compared to Zesa power.

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  • koka

    if oil price fall was to benefit the economy it would have done so already. however as usual the govt and the petroleum companies have kept the fuel price high reaping super profits. the oil price will probably not fall much from the $30 it is at now. the next thing is oil will be rising and as usual the petroleum companies will be the first ones to increase prices. it all boils down to our rotten govt full of incompetent compromised ministers. how come fuel price in SA is as low as $0.80 whilst in zim we still paying $1,25. how come in moz fuel price around $0.75 and zim is way over that. whilst these countries have advantage in terms of being close to the ports they is no way transportation costs could account for additional 50% price variance. Even zambia, a land locked country like zim has lower prices. zanu must fall