Fuel prices are set to change every week as the Zimbabwe Energy Regulatory Authority (ZERA) on yesterday announced that it will revert back to reviewing prices of fuel on a weekly basis in line with movements in the exchange rate which will now be determined through foreign currency auctions to be conducted every week.
Zera had abandoned the weekly reviews after the exchange rate between the Zimbabwe and the US dollars were pegged at 1:25.
The Reserve Bank of Zimbabwe on Tuesday introduced the foreign currency auction system to determine the exchange rate.
When the auction system kicked off on Tuesday, the local currency traded at 1:57.36 against the US dollar, and immediately triggered a 150 percent increase in fuel prices.
Petrol now costs $71.62 while diesel now sells for $62.77, up from $28.96 and $24.93 respectively. ZERA acting chief executive officer, Eddington Mazambani told Parliament Zimbabweans should prepare for weekly fuel price reviews.
“We have had an exchange rate used for fuel different from the one prevailing in the market, but if the auction exchange rate is the one, which is going to be used to procure fuel, yes we are going to change fuel prices on a weekly basis,” he said.
“We have already done an amendment to the Statutory Instrument which established the pricing of fuel on a monthly basis to move back to weekly, which we used to do before.”
Asked why the country continued to enforce mandatory blending when its use was pushing the cost of fuel up, Mazambani said the authority was engaging ethanol companies to come up with a new cost structure.
“The benefits of blending are beyond just looking at the cost, there are environmental issues which we have to look into as well,” he said.
“On the issue of the ethanol price, we did an exercise in 2013 or 2014, and we did a report on the costing.
At that time they (ethanol producers) were not producing a lot so the overhead cost structure was a bit on the high side so currently, we are engaging with the producers.
“We do not only get our ethanol from Green Fuel. There is a joint venture company between the National Oil and Infrastructure Company of Zimbabwe and Triangle called the Ethanol Fuel Company of Zimbabwe. We are engaging them for them to submit their cost structure.
‘‘We want to interrogate their cost structure so that we can establish the true cost of producing ethanol.”