Fuel prices to fall

Motorists will save at least USc6 per litre of petrol following the increase in the mandatory ethanol blending ratio from 10 to 15 percent.

It is projected that these savings will not be disturbed by marginal global crude oil price fluctuations.

However, there are concerns blending ratio increases are not resulting in the anticipated price reduction due to a steady rise in the free-on-board price at Beira Port where Zimbabwe receives most of its fuel.

FOB specifies the point at which the seller transfers ownership of goods to the buyer.

Importers have been getting their consignments at an FOB price of between USc62 and USc63 per litre since June.

Unleaded fuel prices at the Port of Beira have shot up 40 percent since the beginning of 2015.

And filling stations in Harare are invariably selling the product at between US$1,47 and US$1,53 per litre.

Zera chief executive Engineer Gloria Magombo told this publication that ethanol producer Green Fuel was meeting production targets.

She said, “The increase in blending levels was met with the gradual increase of petrol on the international market. In fact, the increased blend has managed to hold the prices and protect the consumers from international prices, which are increasing.

“The ethanol blending at 15 percent has an impact of reducing the maximum by US6 cents on the price of petrol. The price of crude oil on the international market has been increasing steadily. The prices for diesel have remained stagnant at 60 cents/litre while petrol decreased marginally from 63 cents to 62 cents/litre (last week). These movements have a bearing on the final retail price of fuel in the country.”

Energy and Power Development Secretary Mr Partson Mbiriri said filling stations were adhering to stipulated prices, which are reviewed by Cabinet every fortnight.

Mr Mbiriri said ethanol stocks increased since June, clearing the way for the 15 percent blending ratio.

“We once explored the possibility of importing ethanol, but we saw that it would take us very long to reach an agreement with foreign suppliers,” said Mr Mbiriri.

“By the time we could have reached a decision, our own stocks would have been replenished by then. The cost of that exercise was also restrictive.”

Zimbabwe’s retail fuel prices factor in the FOB price, Government levies, taxes, excise duty, administration costs (maximum USc2,6 per litre ) and licencees’ distribution cost (maximum USc5/litre) and a mark-up of up to seven percent for wholesalers and retailers.

In December 2014, Government reduced ethanol blending due to low sugar cane supplies precipitated by water-logging in southeastern Zimbabwe.