Zimbabwe has restricted the selling of ZWL$ priced fuel to service stations that it has a special relationship leaving others to sell in US$ amid fears that forcing players could cause shortages.
The abandonment of the plan follows the reluctance by most service stations to sell fuel in local currency which they believe could disrupt constant supply.
In February Zimbabwe Energy Regulatory Authority (ZERA) announced it was expecting to have more outlets selling in local currency but the weakening of the local currency slowed the programme down.
ZERA chief executive Eddington Mazambani told Business Times that the plan was no longer sustainable.
“We no longer have plans to convince fuel dealers to sell in ZWL$ but they can do so if they want. The move comes after the realisation that this could destabilise the stable fuel sector.
“There are some service stations that get fuel direct from the government, they are urged to sell in ZWL$ as they are getting it at a subsidised price,” Mazambani said.
Zimbabwe has 690 licenced service stations across the country.
Mazambani said ZERA will introduce local currency-charged fuel after consultations with the central bank that provides funds for that.
He said Petrotrade, CMED, Zuva and Genesis are some of the service stations currently selling fuel in local currency.
The slowing in the rollout of more service stations that sell in local currency comes as there are concerns that the fuel price is higher in US terms amid calls for the government to reduce taxes.
Fuel is being sold at US$1.51 and US$1.74 per litre for petrol and diesel respectively.
The fuel was around US$1.30 per litre in January.
Mazambani recently said the government had done well to contain the fuel prices.
Economist Gift Mugano said there is a need to reduce tax heads as they are still high.
“It is high time that the government should relook at their pricing model of fuel as they should relook at some tax heads, for example, they should remove the Zimbabwe National Road Administration road levy since we are getting that from the tollgate.
“Also take out the strategic reserve levy to reduce the burden on the economy but that is not happening,” Mugano said.
He said when fuel price goes up, the pass-on effect is quite massive considering the role of fuel in the economy and this is very inflationary.
According to ZERA, government taxes and levies makeup close to 30% of the final fuel pump price and among some of the taxes and levies on fuel, while Zimbabwe National Road Authority collects US$0.02 per litre on petrol and diesel.
According to the latest statistics obtained from the Treasury, fuel excise accounted for 83.1% of total excise collections in 2021.