Zimbabwe govt raises duty on fuel

16 January 2014, Harare – The Zimbabwe government has increased duty on fuel by between 28 percent and 33 percent in a development that could erode potential gains from its recent directive for traders to slash prices. According to a Government Gazette, the Customs and Excise (Tariff Amendment) Notice, 2015 (No 18), Government repealed duty on unleaded petrol, leaded petrol and diesel.

Finance Minister Patrick Chinamasa said the notice amended the second schedule of Customs and Excise Duty (Tariff Notice) 2012 published in Statutory Instrument 111 of 2012.

robert mugabe

President Robert Mugabe of Zimbabwe

Initial reports had said government had reduced the duty on fuel but this was an error.

The customs duty on leaded petrol has been increased from $0,35 per litre to $0,45/litre, unleaded petrol from $0,35/litre to $0,45/litre while diesel was increased from $0,30/litre to $0,40/litre.

The latest development is likely to strengthen traders’ case in their resistance to lower prices following the directive of the Government.

Fuel traders instantly increase the price of fuel almost immediately whenever there is an increase to its procurement cost or their cost base, but take time to act when the cost goes down.

Traders hiked prices when Government increased excise duty on diesel and petrol from 25 cents and 30 cents per litre to 30 cents and 35 cents per litre, respectively, from September 15, 2014 to raise additional revenue to finance “inescapable expenditure”.

And only last week, Government ordered fuel traders to slash prices to a maximum allowable of $1,32 per litre of petrol and $1,20 per litre of diesel in line with the falling global prices.

However, fuel retailers have taken long to follow the global trends giving all sorts of arguments, including that they needed to finish old stocks and that they had a high cost base.

This was in spite of the fact that traders in neighbouring countries including Zambia and South Africa had slashed or been made to cut the retail prices of the price of fuel.

Energy and Power Development Minister Dr Samuel Undenge last week said the cost component of fuel was critical to the success of the Zimbabwe Agenda for Sustainable Socio-Economic Transformation covering the period 2014/ 18.

While global oil prices came down almost 50 percent between June and December 2014, traders had not cut prices as has happened in other countries, including Zimbabwe’s neighbours.

Minister Undenge said that Zimbabwe’s own oil prices had not gone down that much in tandem with the crude oil prices, but should, however, go down to levels that reflect crude oil prices, having factored in all costs relevant to obtaining the refined products.

The minister said Government’s fuel pricing formula was based on the cost plus formula, which entails obtaining the full on board prices at the port of Beira when Zimbabwe buys fuel.



– The Herald

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