Business decries fuel price hikes

09 Oct, 2019 - 00:10 0 Views
Business decries fuel price hikes Zimbabwe National Chamber of Commerce

The Chronicle

Oliver Kazunga, Senior Business Reporter

THE Zimbabwe National Chamber of Commerce (ZNCC) has expressed concern over continuous fuel price increases saying the trend was negatively impacting on production due to rising cost of goods and services.

Recently the fuel price has been increasing on a weekly basis with the latest adjustment last weekend pegging diesel at $15,49 per litre and petrol at $14,97 per litre from an average of $12,42 and $11,76 respectively.

The Zimbabwe Energy Regulatory Authority (Zera) has been regularly announcing the increases it attributed factors in the international market. 

The disparities in fuel price in consideration of transport costs, has meant that consumers in remote areas away from Harare were paying more.

In an interview yesterday, ZNCC Matabeleland regional chairperson, Mr Golden Muhoni, companies were feeling the pinch of price increases as fuel was a major cost driver in the economy.

“Obviously, energy and power are the major cost drivers in the economy. So, the continued price increases on fuel are negatively impacting on the operations of businesses.

“If the price of fuel goes up, it has a serious bearing on our price structure across the board and this also burdens the consumer,” he said.

“A rise in fuel price impacts on everything. For example, transport cost on commuters has gone up and if somebody was paying $3 a single trip, now that person has to fork out $5 to come to work. It’s a whole lot of problems, which we have to grapple with in the economy right now.”

Mr Muhoni said urgent measures were needed to tame price escalation for the benefit of the entire economy.

In a separate interview, the Confederation of Zimbabwe Industries (CZI) Matabeleland Chapter president, Mr Shepherd Chawira, said the rise in fuel price was reflective of the changes in exchange rates.

“The fuel price hikes are tracking the exchange rate on the interbank market, which is a good thing to happen. I don’t think it’s a bad thing at all because it’s a cost recovery measure, fuel has to be sold comparatively with the exchange rate,” he said.

“However, the biggest challenges that we have are the power shortages and access to forex on the interbank market to buy raw materials. This is what is weighing down performance of companies, so fuel price increase is facing the reality on the ground.

“If the exchange rate moves on the interbank market, obviously we expect any product, which is linked to foreign currency to import the product and fuel is one of them, there is need to adjust the price.”

Mr Chawira said other challenges facing industry that need to be addressed to boost capacity utilisation included cash constraints following the recent re-introduction of the Zimbabwe dollar.

He said under a normal situation companies should be able to pay their workers wages and salaries that are sustainable to allow them to be able to be cushioned on transport costs triggered by fuel price increases.

Last year, Zimbabwe’s manufacturing sector capacity utilisation grew 3,1 percentage points to 48,2 percent in the 12 months to August 2018. Due to the challenges facing the economy, capacity utilisation in the manufacturing sector is this year expected to go down. — @okazunga

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