eBusiness Weekly
Tawanda Musarurwa
Zimbabwe’s prices for petrol and diesel — in United States dollar terms — are largely comparable to what is obtaining in the region, a report by MHMK Capital reveals.
According to the report, as at October 25, 2019, Zimbabwe’s diesel was priced at US$1,09 per litre, while petrol was pegged at US$1,05 per litre. Comparably, Zimbabwe’s northern neighbour Zambia was selling diesel at US$1,08 per litre, while petrol was slightly pricier at US$1,21 per litre over the same period.
In Mozambique, diesel is retailing at US$1,03 a litre, and petrol at US$1,07 a litre, while in South Africa, diesel was going for US$1,12 per litre and petrol at US$1,06 per litre as at October 25.
The report also shows that during the period under review, diesel was retailing for US$1,19 a litre, and petrol at US$1,18 a litre in Malawi. In Kenya, diesel was retailing at US$0,97 a litre, while petrol was going for US$1,09 a litre.
The cheapest fuel is retailing in Botswana, with diesel at US$0,83 a litre and petrol at US$0,82 a litre.
Fuel is also cheaper in Eswathini, where both diesel and petrol were retailing at US$0,84 a litre as at October 25.
Namibia had the third cheapest fuel prices at US$0,89 a litre and US$0,86 a litre for diesel and petrol, respectively, during the period under review.
Earlier this week, the cost of both diesel and petrol in Zimbabwe rose by 12 percent, the second increase this month, the Zimbabwe Energy Regulatory Authority (Zera) announced earlier this week.
Zimbabweans had sighed a breath of relief over the past two weeks, as Zera maintained the fuel price stable on the back of stable interbank rate during that two-week period.
According to Zera, the price of petrol (in local currency) with effective from October 28 was pegged at $16,75 per litre from $14,97 per litre, while diesel was up by $1,83 to $17,47 per litre.
The price increase was mainly influenced by exchange rate movements as the local currency continues to slide against major currencies. At the last price review, the floating inter-bank rate was US$1 to ZWL$13, but in the past two weeks it had depreciated to US$1 to $15,57.
Changes in the fuel prices are also due to the FOB (Free on Board) price movements as well as the revised duty regime that came into effect this September.
Zimbabwe’s fuel price parity appears not to be the only parity when regional comparisons are done, with the local currency currently at par with the region’s economic powerhouse and the country’s largest trading partner South Africa.
Analysts at MHMK Capital say linking South Africa and Zimbabwe’s currencies could bring stability to the latter’s, which has been on a free fall from around February to the end of September.
“Since September23, the rate of depreciation of the local currency in the formal market has slowed with the unit trading almost at par with the ZAR (the South African Rand),” they said.
“Tracking the Rand or unofficially pegging the local currency to the Rand may quickly bring the much-needed currency stability in the country that will help in underpinning the ongoing economic and political reforms.
“Zimbabwe relies on its southern neighbour, South Africa, for both industrial and consumptive goods.”
