Global oil jitters push Zim into urgent ethanol strategy

STAFF WRITER

A fresh wave of anxiety has gripped Zimbabwe’s economy after a sharp spike in fuel prices, triggered by escalating tensions in the Middle East, which has sent business operating costs surging, transport costs soaring and households scrambling to cope, forcing government to fast-track an emergency ethanol expansion plan to cushion the blow, Business Times can report.

As a net fuel importer, Zimbabwe remains acutely exposed to global oil shocks. This week’s surge has brutally exposed that vulnerability, with pump prices rising steeply and triggering immediate ripple effects across the economy, intensifying inflationary pressures and unsettling both industry and consumers.

Diesel jumped from US$1.77 to US$2.05 per litre, while petrol surged from US$1.71 to US$2.10 per litre, an abrupt increase that has already sparked fare hikes by commuter operators and intensified pressure on already strained household incomes.

The spike, linked to deepening geopolitical tensions in the Middle East, has ignited widespread concern among consumers and businesses alike, with calls mounting for urgent government intervention to stabilise prices.

In response, government is now planning towards an aggressive scale-up of ethanol production at GreenFuel (Pvt) Ltd in Chisumbanje, in a bid to restore a higher blending ratio and reduce reliance on imported fuel.

Authorities are targeting a return to an E20 blending ratio-up from the current E5, which has been constrained by seasonal sugarcane output. If achieved, this could slash pump prices by as much as US$0.18 per litre, offering critical relief to consumers.

Vice President Constantino Chiwenga, speaking after touring GreenFuel’s facilities on Thursday, said the move forms part of a broader strategy to shield the economy from external shocks.

“These are the discussions that we had this morning (Thursday),” Chiwenga said.

“With the 40m litres storage capacity they have, the expansion plans they have will enable them to produce more ethanol. The Minister of Energy and Power Development,July Moyo is here so that they discuss issues related to expansion modalities with Government assisting in ease of doing business for the investors. They are not going to be alone in this.”

Government is also pushing for coordinated production across the industry, including collaboration with Tongaat Hulett, to ensure sustained ethanol supply.

“We have asked them to coordinate with other producers. This is Zimbabwe’s direction,we want to sustain ourselves amidst current challenges. It is now a matter of coordination and collaboration between Government, GreenFuel, and other stakeholders in the fuel industry,” Chiwenga added.

He further revealed plans to expand sugarcane production into new regions to secure raw materials for ethanol.

“We must invest in sugarcane production in areas like Zambezi, Runde, and others with potential,” he said.

GreenFuel general manager Conrad Rautenbach said the company is already accelerating expansion, targeting an increase in ethanol storage capacity from 40m litres to 120m litres annually.

“We did not predict the crisis in the Middle East, but it is a call to improve self-reliance as a company and as a country,” Rautenbach said.

“With improved storage capacity, we should be able to return to E20 blending. If there was an E20 blending ratio now, there would be a saving of US$0.18, and that will be quite significant.”

Beyond ethanol, government is also weighing the option of cutting fuel taxes to ease pressure on consumers.

Presidential spokesperson George Charamba confirmed that consultations are underway following growing public outcry.

“These increases arise from a disturbed situation in the Persian Gulf and the Middle East.It places us in a very vulnerable position where we are susceptible to price turbulence,” Charamba said.

“But after engagement, the plea from the citizenry was would government consider reducing fuel-related taxes? They are substantial and, if reduced, could transfer some degree of ease to the citizenry. That is a legitimate and reasonable request.”

Fuel taxes in Zimbabwe account for nearly 40% of the pump price, including a fixed US$0.30 per litre excise duty, a strategic reserve levy of up to US$0.247 per litre, and a carbon tax, alongside other charges such as debt redemption levies and regulatory fees.

However, Charamba warned that any tax cuts must be handled cautiously.

“As we cut back on taxes, revenue to government shrinks and our capacity to deliver basic services can be curtailed,” he said.

For now, the immediate impact is already visible on the ground. Transport fares are rising, basic goods are under upward pressure, and consumers are bracing for a broader cost-of-living surge—underscoring how quickly distant geopolitical tensions can translate into domestic economic pain.