Before the ink could dry on the last communique from the Zimbabwe Energy Regulatory Authority which reduced the price of diesel, Zimbabweans were hit with a fuel price increase from the regulator late yesterday. The increase takes the diesel price up to ZWL$18.66 for diesel and ZWL$18.70 for petrol.  Prices came into effect this morning.

The developments now place the fuel price at US$1.03 and US$1.04 for petrol and diesel respectively according to the current interbank rate. On the parallel market, those prices equate to US56 cents per litre for both petrol and diesel. Yesterday we carried a story that showed the Reserve Bank of Zimbabwe publish details of how much was availed to fuel companies in an attempt to show transparency in the face of continuous fuel shortages.

The Zimbabwe Anti Corruption recently launched a probe into fuel companies reluctance to adopt the fuel tracking system that was developed by Matsimba technologies. The system was tested at the CMED outlet on Third Street Harare and found to work perfectly. The system allows remote monitoring of fuel movement at service stations. The belief is it will be used to stamp out diversion of fuel to the black market and for smuggling abroad.

I went to great lengths to show the US dollar equivalents of these prices because there are service stations which have been allowed to sell in foreign currency and more to be added to the list. An image that was circulated well on social media shows that Zuva service stations sell their fuel for US$1.46 for petrol and US$1.29 for diesel. Why on earth would anyone sell something for $1.06 when they can sell the same thing, to the same people for $1.43? There is no discernible business incentive to supply fuel at the current Zimbabwean dollar prices even if you are allocated foreign currency for procurement at the interbank rate.

Author of the Seven Habits of highly effective people Dr Stephen Covey put it best when he wrote the problem is the way you look at the problem”. We do not know how much was spent on the fuel tracking system developed by Matsimba technologies but one can imagine it was not a small amount. Smuggling of fuel to the black market is not the problem but rather a symptom of the problem. Subsidies are not in themselves a problem but our current subsidy system leaves a lot to be desired.