Zimpapers Logo

Golden Sibanda and Tinashe Nhari Harare Bureau
FUEL traders have started slashing prices following the government’s directive to reduce prices in line with falling global oil prices. However indications are that some traders may not cut prices to levels set by the government.

Energy and Power Development Minister Samuel Undenge last week issued a two-week ultimatum, effective December 31, 2014, instructing fuel traders to reduce the cost of fuel.

Minister Undenge said the retail price of petrol should come down to a maximum of $1,32 per litre and diesel to $1,20 starting today and threatened unspecified action if dealers do not comply.

A snap survey yesterday showed that while fuel dealers had started slashing prices, they had not reduced them to the thresholds prescribed by Minister Undenge on Friday last week.

Total Zimbabwe commercial director Dominic Dhanah said while they would want to comply with the government’s directive, the prices would enable local dealers to realise decent profits.

“We’re going to hold a meeting today (yesterday) with the Minister of Energy to discuss the reasons why local fuel traders haven’t reduced prices to the one set by the government,” he said.

Sakunda Energy reduced the price of diesel from $1,57 per litre to $1,33 and petrol had come down from $1,47 per litre to $1,44, far short of the maximum allowable price of $1,32 per litre.

Total Zimbabwe cut its price of petrol from $1,40 per litre to $1,38 and diesel from $1,52 per litre to $1,49 while Floyd Enterprises had prices pegged at $1,36/l for diesel and $1,48 for petrol.

Zuva cut diesel prices from $1,36/l to $1,29 and from $1,50/l to $1,41 for petrol and it remains to be seen whether the retailers are going to reduce the prices to the required limits.

Local service stations workers yesterday said that prices had been reduced to finish up old stock prices and may be reduced further as the day progresses in line with the ministry’s directive.

While global oil prices had come down almost 50 percent between June and December 2014, traders had not cut prices as has happened in other countries, including Zimbabwe’s neighbours.

“Our own oil prices haven’t gone down that much in tandem with the crude oil prices, but should, however, go down to levels that reflect crude oil prices, having factored in all costs relevant to obtaining the refined products we buy,” Minister Undenge said at a press briefing on Friday.

The Energy minister said the pricing of fuel in the country was based on the cost plus formula. This entails obtaining the full on board prices at the port of Beira when Zimbabwe buys fuel.

Minister Undenge said the cost component of fuel was critical to the success of the Zimbabwe Agenda for Sustainable Socio-Economic Transformation covering the period 2014/18.

He said price increases and decreases should lag two weeks behind FOB prices at the port.