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Fuel prices doubled again
By Lance Guma
07 September 2005
Government has agreed to double the price of petrol
from $10 000 to $22 300 per litre. Diesel goes up from $9,600 to
$20,800 per litre.
It's the second time in two months the price has been increased
by over 100 percent. According to oil bosses, the changes are with
immediate effect. It was only on Monday that Finance Minister Herbert
Murerwa criticised price controls as creating distortions in the
market and it seems government is buckling under pressure to make
tough economic reforms.
Economic analyst Eddie Cross believes oil company
NOCZIM is simply trying to play catch up with the black market price
which still remains higher than the new prices. The cheapest black
market rates for fuel are pegged at 35,000 per litre and the new
prices will do nothing to improve supply. Cross believes the real
market price in line with the exchange rate is actually $40,000
per litre and until government gets to that margin the black market
will continue to thrive while prolonging the shortages.
NOCZIM had been selling fuel to farmers and public
transport operators at around $7,000 per litre while garages were
selling at $10,000 per litre. Unfortunately those getting the fuel
at concessionary rates were reselling to the black market thus maintaining
the distortion in the market. Most people have not bought fuel from
garages in over 6 months relying instead on the black market.
Ever since 1999 acute foreign currency shortages
precipitated by disastrous economic and political policies have
seen erratic fuel supplies trickling into the country. The government
has exhausted various avenues to procure fuel including arrangements
with Iran, Libya, China and even Namibia at one point. A bad financial
record is now making negotiations with potential suppliers even
more difficult. Experts warn that if the country is expelled from
the International Monetary Fund over unpaid arrears then the situation
is likely to get worse.
The Consumer Council of Zimbabwe responded
negatively to the policy review on price controls saying the knock
on effects will hurt the consumers.
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