EDITORIAL COMMENT: Fuel prices should come down

fuel-dealThere is no excuse for players in the fuel sector to hold the nation to ransom. Prices of fuel have retreated in the last couple of weeks globally, but strangely, the local fuel sector has not responded to the international events.

The Zimbabwe Energy Council makes it clear in our story elsewhere in this edition that fuel prices should come down by about 25 percent per litre. Zimbabwe does not produce fuel.

Our prices are absorbed from the international market. Therefore, fluctuations of fuel prices on the world market should naturally affect local pricing.

In South Africa, the Department of Energy announced that petrol was to decrease to R11,20 per litre for inland 95 octane (R10,79 per litre for coastal) and R11,02 for 93 Octane from yesterday and diesel will decrease by R1,05 per litre, while illuminating paraffin (SMNRP) will decrease by R1,44 per litre and liquefied petroleum gas will decrease by R2,10 per kilogramme.

To show the extent of saving this translates for the consumers, economists estimate that for an average car with a 50-litre tank, that amounts to R156,50 saved on each full tank.

Global oil-prices hit a five-and-a-half-year low at less than US per barrel on Monday.

While local fuel dealers have in the past been quick to raise prices in line with international increases, their fatigue to respond to decreases is worrisome. It could mean the sector is profiteering at the expense of hard pressed Zimbabweans.

The worrying point is that fuel is central to our daily lives. We have no substitutes for fuel. You can use charcoal in place of firewood; you can equally use coal for thermal power in place of hydro.

We are, however, not that privileged when it comes to petroleum. There are no substitutes. This, therefore, means that fuel prices affect the whole economy. An increase in fuel prices triggers increases across the economic spectrum.

Prices of bread, transport, electricity and water all respond immediately to any movement in the price of fuel. Costs of agriculture and manufacturing are functions of obtaining fuel prices. This is why it is important to interrogate this sector. It is a critical sector which should be closely monitored.

The petroleum sector is closely linked to the security of any nation. If saboteurs are allowed to run the sector they can easily manipulate the economic situation through artificial shortages and price increases. These may be calculated to trigger increases across the board and encourage shortages and disturbance of peace in any country.

We fought a gruesome war to control our economic developments. While Government has directed other sectors such as the mobile services sector to knock down their charges in line with the region, the same should apply to this critical sector.

The fact that the players themselves have not responded to the international fall in prices shows that they are bent on profiteering.

Their argument based on the fact that they are cleaning out old stock does not hold water as we are all aware that no dealers have at any time been holding more than two months stock. We need to scrutinise their stock piles and records to ensure that they were holding that much stock. Not all of them have been holding one month stock.

If prices are retreating at source why should they remain high locally? There is no value addition to push up costs.

We are not advocating for price controls. We are simply saying fuel prices are internationally determined and, therefore, any movement on the global stage should be felt locally.

A decrease in fuel prices has many downstream benefits.

Food prices should also respond, transport costs will be knocked down, meaning an increase in real disposable incomes for locals.

More money to spend will help stimulate economic activity which is key for national development.

This sector should be seriously interrogated.

We call on the Minister of Energy and Power Development to be seized with this matter. It is a matter of national importance.

Any reduction in prices means an extra dollar for the consumers and this is welcome.