We all kind of expected it so no one was shocked when ZERA announced new fuel prices yesterday evening. Earlier in the day, after it’s first weekly auction, the new Reuters based system threw out $57 ZWL as to 1 USD as the new average exchange rate and powers at the energy regulator wasted no time updating the price of fuel to $62.77 ZWL ( or $1.09 USD) for diesel and $71.62 ZWL ( or $1.28 USD) for Blended Petrol.
That was a massive 100% hike in prices but to be honest that was much lower than we anticipated. In fact, based on our analysis, the rate will probably go higher next week when the next auction will be held. What enraged a lot of Zimbos who commented on the new prices was the price of ethanol. According to ZERA the product is going for:
- $54.58 ZWL per litre or
- $1.10 USD
On the other hand unblended Petrol is going for:
- $21.66 ZWL before duty and
- That is $38.87 after duty
What does this mean?
The reason why a lot of people are fuming is because it actually means that blended petrol is more expensive than unblended petrol! That higher price is on account of the ethanol in E20 that is being sold at a higher price than imported petrol. This has left many asking the question: Why are we paying more for something that is already cheap isn’t the whole point of blending so that we can pay less?
The truth is that there is nothing unusual here. Green fuels tend to be more expensive than their non-renewable counterparts. Blending fuel is not about just lowering the price, in fact, as the latest case shows, blending sometimes leads to motorists paying higher prices. There other benefits brought about by blending that still makes it desirable despite a marginal increase in the final price of the product. Touted benefits of blending include saving the environment and in the case of Zimbabwe saving on foreign currency.