Innocent Sibonginkosi Ncube
The Zimbabwe Energy Regulatory Authority (ZERA) has identified several key factors contributing to the high fuel prices in Zimbabwe, which are among the most expensive in the Southern African Development Community (SADC) region.
High Tax Structure
One of the primary reasons for the elevated fuel prices is the high tax cost structure imposed on petrol and diesel by the government.
According to ZERA, taxes and levies account for approximately US$0.52 per litre for diesel and US$0.54 per litre for petrol.
This tax burden significantly impacts the overall price at the pump, making it higher than in neighboring countries.
Comparison with Regional Prices
Currently, the price per litre of petrol and diesel in Zimbabwe stands at US$1.51 and US$1.52, respectively. In contrast, other SADC countries have lower prices, such as Zambia (US$1.20 for petrol) and Botswana (US$1.10 for petrol) and South Africa (US$1.16 for patrol).
This disparity highlights the impact of Zimbabwe’s tax structure on fuel pricing.
Additional Cost Factors
Beyond taxes, several other costs contribute to the high fuel prices:
- Importation Costs: Being a landlocked country, Zimbabwe must import fuel from ports in neighboring countries, which adds to transportation costs.
- Profit Margins: Oil companies and fuel retailers also add their profit margins to the final price.
- Administrative and Distribution Costs: These include storage, handling fees, and the costs associated with distribution, which can add up to US$0.54 per litre for both petrol and diesel.
- Blending Costs: Only petrol is blended, which incurs additional costs that affect its price.
Conclusion
In summary, the combination of high taxes, importation challenges, and additional operational costs are the main drivers behind the high fuel prices in Zimbabwe. While ZERA acknowledges these issues, it also points out that the country has limited control over external cost drivers, emphasizing the need for better management of internal costs to potentially lower fuel prices in the future.
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