Govt cautious as fuel supply stabilises

ENERGY and Power Development Minister Joram Gumbo says Government remains cautiously optimistic that the fuel situation in the country has stabilised on the back of improved availability and shorter queues at the majority of fuel stations.

Zimbabwe experienced acute fuel shortages towards the end of last year, after consumption inexplicably vaulted by 77 percent to 480 million litres in the six months period June to November 2018 compared to the same period the prior year.

As the foreign currency starved country buckled under pressure to supply the requisite hard currency needed to import and meet the sudden huge appetite for fuel, it emerged some of the demand came from speculators who were hoarding and reselling on black markets at high premiums in Zimbabwe and the region where official prices are high.

Government, which technically subsidises the fuel imports then took a bold decision to end the arbitrage, which is abetted by the currency situation, by more than doubling the retail price of fuel and making it unprofitable to hoard for resell.

In adjusting the fuel prices, Government increased the price for a litre of diesel to $3,11 from an average of $1,30 per litre while the price of petrol went up to $3,31 from an average of $1,40.

The decision, announced by President Mnangagwa just before he left for his successful tour of Eurasia, has proved to be painful, but master-stroke of genius, which also saw Government devising measures to counter fuel cost induced price spiral.