Home » Industry » NECF to Host Indaba On Falling Oil Prices

THE National Economic Consultative Forum will on Monday host a dialogue on the implications of declining global oil prices on the Zimbabwean economy, the NEFC said yesterday.

Discussions will also be centred on how economic agents can benefit from the falling oil prices and demystifying misconceptions on the prevailing fuel retail prices.

“With energy costs making up 30 percent to 40 percent of operating costs in Zimbabwe the major question is: Is the fall in oil prices likely to translate in reduced costs of doing business in Zimbabwe thereby reducing consumer prices,” said NEFC.

Global oil prices have been declining since June last year from around $115 per barrel (a barrel of oil is approximately 159 litres) to a low of $48 per barrel as of January 12 2015. It is expected that the price of oil will remain depressed as the biggest cartel in the industry, OPEC, has decided not to cut production.

The price of oil is critical to today’s world economy, given that oil is the largest internationally traded good, both in terms of volume and value, creating what some analysts have called a hydrocarbon economy.

It is widely expected that the reduction in oil prices will have a significant impact on the reduction in energy costs and transportation costs resulting in a reduction in consumer prices.

The Consumer Council of Zimbabwe has been calling on the Government to ensure that all consumers benefit from the decline in international oil prices. The consumer rights lobby body is, however, irked by the fact that fuel dealers are quick to increase their prices when global oil prices rise but are very reluctant to reduce prices when the reverse happens. The Zimbabwe Energy Regulatory Authority (ZERA) has commissioned a study on recommended fuel prices in line with the current trends.

The Government, through the Ministry of Energy and Power Development, directed fuel dealers to reduce fuel prices by at least 20 cents a litre to a maximum of $1,44 per litre of petrol and $1,32 for diesel.

Consequently, the Government then evoked Statutory Instrument No. 4 of 2015 adjusting excise duty on petrol and diesel from $0,35 to $0,45 per litre and from $0,30 to $0,40 respectively.

“These adjustments were aimed at sharing the benefits arising from the decline in fuel prices,” said NECF.

“However, in Zimbabwe, the decline in fuel prices has been marginal despite Zimbabwe being one of the countries which blends unleaded petrol with ethanol, which should make prices even lower. Thus the dialogue is expected to come up with clear and actionable recommendations in line with the reduced global oil prices and to reach consensus on how best the country can benefit from the slump in global oil prices.”

It will be a highly interactive and dynamic programme developed with more time for discussions.

The dialogue will consist of plenary sessions with a combination of presentations, expert perspectives and inputs from Government, fuel dealers, transporters and consumer bodies.

The speakers will include Ministers of Finance and Economic Development and Energy and Power Development Mr Patrick Chinamasa and Dr Samuel Undenge respectively, Deputy Chief Secretary to the President and Cabinet Mr Justin Mupamhanga and various industry players.

Source : The Herald