Zimbabwe hikes fuel price again
HARARE - Zimbabwe on Monday raised fuel prices again, with petrol going up from ZWL6.10 to ZWL7.47 per liter in line with Finance Minister, Mthuli Ncube's suggestion that the price of fuel per liter be equivalent to US$1.000.
The southern African country is still battling fuel shortages which are disrupting operations for companies. Commuter taxi fares have also been on the up, further burdening Zimbabweans who are having to do with power outages and other headwinds.
“Please be advised that the fuel prices effective Monday 22 July are as follows; Maximum pump price diesel ZWL7.19, maximum pump price petrol ZWL7.47,” said the Zimbabwe Energy Regulatory Authority in a notice to petroleum industry traders and dealers.
Zimbabwe has been hiking prices of fuel after doing away with the 1:1 exchange rate for local currency versus US Dollar in February this year.
The Zimbabwean Finance Minister said earlier this month that the price of fuel should be equivalent to US$1 per liter although there have been complaints that salaries have remained stagnant.
Market Watch, a Zimbabwean economic analysis platform, said on Monday that the new fuel prices in Zimbabwe effectively means that diesel and petrol prices in Zimbabwe are still being subsidized by the government.
“With our observed parallel market rates around 10:1, this puts 1 liter of Diesel at $0.719 USD. With regional average Diesel prices between $1.05 - $1.10 our fuel is still being subsidized,” said Market Watch.
Private equity specialist Tendai Manyange has criticized the government for continuing to subsidize fuel importation into the country.
He said: “How long is government going to subsidize petrol/diesel for, until the tapes run dry? Govt is making political decisions with ZERO economic sense... there is no reason why fuel in Zimbabwe should be the cheapest in the region,”
However, it is expected that the increase in the price of fuel will result in another wave of price increases, further stocking up inflation which analysts say is now tipping into hyper-inflation. Another fuel price increase in January this year resulted in deadly protests across Zimbabwe.
The interbank forex market which the government has introduced has been solidifying in the past few weeks while the parallel market has been starved of liquidity. This has forced parallel market exchange rates downwards and sometimes aligning with the official interbank exchange rates.
Unions have been pushing for salary increases, with companies such as those in banking and the government agreeing to varying hardship allowances to cushion workers after unions declared incapacitation to report for work.
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