Online Reporter
The Herald, 4 November 1998
THE pump price of illuminating paraffin has gone back to the old price of $1,82 immediately in a move meant to cushion domestic consumers, the Minister of Transport and Energy, Cde Enos Chikowore, has said.
In addition, the Government will promulgate a law which will ban service stations from dispensing paraffin into vehicle tanks in a bid to prevent abuse by transporters and industrial consumers of the discount.
Last week, the Government approved the increase in the price of illuminating paraffin by 345,60 percent.
This resulted in the price of paraffin shooting up from $1,82 percent to $8,11 per litre, 1c more than the price of diesel.
The Government also approved the increase in the pump price of leaded petrol which went up by 66,7 percent to $9,67 a litre while diesel rose to $8,10 per litre.
Prices of unleaded petrol, Jet A-1 fuel, and liquid petroleum gas also went up in a bid to improve the viability of the National Oil Company of Zimbabwe which has been operating unprofitably and failing to break even.
Cde Chikowore said last night that the fuel price increases announced on Friday had overlooked the decision made by Cabinet on Tuesday last week to have a dual pricing structure for illuminating paraffin which had then resulted in the latest move.
The purchase price from the oil companies for bulk and industrial consumers will remain at the announced $8,11 per litre.
“The retail pump price for the domestic consumer shall remain at the old price of $1,82 cents per litre. This dual pricing structure is meant to cushion the domestic consumer while at the same time discouraging abuse by non-domestic users,” he said.
Transport operators had in the past taken advantage of the cheap price of illuminating paraffin and used it as a substitute of diesel.
Lessons for today:
- This passage reveals a moment of government responsiveness and policy correction in Zimbabwe’s economic management during 1998. The government had approved steep increases in fuel prices, including a 345,6 percent hike in paraffin, which raised its price from $1,82 to $8,11 per litre, even higher than diesel.
- The hike disproportionately affected domestic consumers, many of whom relied on paraffin for cooking and heating.
- Recognising the impact, the government reversed the price hike for domestic users, reinstating the old price of $1,82 per litre.
- A law was also proposed to ban service stations from dispensing paraffin into vehicle tanks, addressing misuse. Minister Chikowore’s swift action reflects a willingness to listen and correct course, which is a hallmark of responsible governance.
- Fuel subsidies must be well-targeted and tightly regulated to ensure they benefit the intended groups. Without proper controls, they can lead to market distortions, supply shortages, and policy reversals that affect both consumers and the broader economy.
