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Zimbabwe Announces Fuel Price Increases - 2003-10-01

The Zimbabwe government has announced the second price hike for petroleum products in as many months, hoping it will solve the country's four-year fuel crisis. The price increases were announced Tuesday after the previous price increases in August failed to cut demand or increase supply.

In its August decision, the government of President Robert Mugabe surrendered its monopoly on the importation of fuel. It allowed oil companies to import and sell fuel at what Minister of Energy Amos Midzi called, market-related prices. But the oil companies considered the price hike inadequate, and gas stations remained dry.

This round of increases brings the price of one liter of gasoline to $2.40 (US) at the pump and diesel fuel to $2.24.

The government will continue to import fuel only for its own use, that of passenger transport operators and the agricultural sector. Prices for that fuel remain unchanged.

Even after the latest increase, fuel prices are still somewhat lower than what gas stations have been charging motorists unofficially.

The government has also been turning a blind eye to private importers who sell their fuel at four times the government price and, in some cases, demand payment in U.S. dollars.

The government relinquished its monopoly on fuel importation when its agreements with oil producing countries, notably Libya, collapsed because Harare ran out of foreign currency reserves and could not pay for the imports.

Confederation of Zimbabwe economist Farai Zizhou says the increase should not have a major impact on the already skyrocketing inflation, because motorists have been paying the higher prices for some time.