THE government says the Reserve Bank of Zimbabwe is putting in place measures to avail foreign currency for adequate fuel supplies while also coming up with a fuel pricing structure that prevents artificial shortages.
Long and meandering queues have now become the order of the day at most service stations before the economy has fully reopened from the Covid-19 lockdown.
Speaking to ZBC News, Energy and Power Development Minister, Advocate Fortune Chasi attributed the issue to foreign currency shortages and a flawed fuel pricing structure which is causing artificial shortages, hence the need for a review.
“I have engaged the Reserve Bank of Zimbabwe to avail enough foreign currency because this is part of the challenge but at the root of it is that our fuel is too cheap compared to prices obtaining in the region. So, I am quite aware that there is a review of the price which is currently ongoing to make sure that we stem out these shortages caused by arbitrage opportunities.”
Analysts also say that the low prices are feeding into a thriving parallel market where fuel meant for registered service stations is being diverted to the black market.
Economists, Mr Kipson Gundani and Persistence Gwanyanya; concurred with Minister Chasi adding that attention should be on the fixed exchange rate.
“It is quite true that prices of fuel here are very low compared to the region and the demand may be driven by people wanting to procure fuel for speculation not for real economic purposes,” Mr Gundani said.
“The manner in which fuel prices are calculated give rise to the low prices because the major price component, the Free on Board price (landing price) is calculated by multiplying with the exchange rate of 25 which is not indicative of what is happening on the ground, so this creates artificial shortages,” said Mr Gwanyanya.
Last week the Reserve Bank of Zimbabwe said in a statement it is reverting to a market-based exchange rate regime which once operational will help reduce distortions responsible for artificial shortages.