Page 12 - DMEA Week 19 2020

DMEA COMMENTARY DMEA
value. “This [gap] means that MERA has trans- ferred only half – 50% – of the benefits of the decrease to consumers,” he asserted.
Malawi’s government does appear to be con- cerned, though, that consumers may not notice the effects of the price cuts immediately. Last week, MERA officials said they were asking transportation companies to consider reducing their fares to reflect the drop in fuel costs. As of press time, it was not clear whether their efforts were likely to succeed.
Zimbabwe: more changes
Fuel prices have also gone down in Zimbabwe within the last week. On May 6, Zimbabwe Energy Regulatory Authority (ZERA) set a retail price ceiling of ZWD20.84 ($0.0576) per litre for diesel, down from the previous level of ZWD21.52 ($0.0594). It also capped pump prices for E5 blended gasoline at ZWD21 ($0.0580), down from the previous limit of ZWD21.77 ($0.0602).
ZERA said in a statement that it was giving retail fuel sellers some leeway with respect to pricing. “Operators may ... sell at prices below the cap, depending on their trading advan- tages,” it noted. “Stakeholders are advised that the petroleum price releases can be verified on the official ZERA website, Facebook and Twit- ter handle.”
Eddington Mazambani, ZERA’s acting CEO, was quoted as saying by The Herald that lower oil prices had not been the only factor in his agency’s decision. Officials in Harare also wanted to cut fuel prices to reflect changes in the tariff regime, he said, without elaborating.
Mazambani also said that ZERA might slash fuel prices again, if world oil markets lost more ground. He was speaking around the same time that NewsZimbabwe.com reported that the price cuts would help consumers reduce their day-to- day expenses. The site also noted that motorists have not had to wait long to fill up at Zimba- bwean filling stations lately, since coronavirus has dampened local fuel demand.
Tanzania: regional differences
Like Malawi and Zimbabwe, Tanzania has also reduced fuel prices in response to developments
on world oil markets. But the cuts are not having the same impact on all regions of the country.
On May 5, Tanzania’s Energy and Water Util- ities Regulatory Authority (EWURA) released its May pricing schedule for petroleum products brought into the country via the port of Dar es Salaam. As of May 6, it said, retail price ceil- ings for gasoline, diesel and kerosene will drop by TZS219 ($0.095), 143 ($0.062) and TZS355 ($0.153) per litre respectively.
Motorists in Tanga, Manyara, Kilimanjaro and Arusha will see even more extensive cuts, reported The Citizen. In these northern regions, it said, retail prices will sink by TZS463 ($0.200) for gasoline and TZS377 ($0.146) for diesel.
In Dar es Salaam, these changes will bring per-litre pump prices down to TZS1,868 ($0.807) for gasoline, TZS1,846 ($0.798) for diesel and TZS1,568 ($?0.678) for kerosene, EWURA said. At the same time, it said, drivers in Arusha, Manyara, Moshi, Mwanga, Same and Tanga will be paying less than TZS1,800 ($0.778) per litre for gasoline.
Conclusion
Since Malawi, Zimbabwe and Tanzania are all dependent on imported petroleum products, lower fuel prices are not just good for drivers. They can also improve government finances by bringing down the amount of money owed to foreign suppliers by the state agencies that over- see the fuel trade.
The reduced outlays will probably have a limited impact, though. Two of the countries mentioned here (Zimbabwe and Tanzania) are still under a state-imposed lockdown, so they are consuming far less fuel than usual. As a result, they are likely to see imports rise again once pub- lic health restrictions are loosened, so their fuel bills will only go down in the short term.
Meanwhile, Malawi has thus far refrained from introducing lockdown measures. The gov- ernment has tried to do so, but the high court issued a temporary injunction in late April that barred it from taking this step. Nevertheless, fuel demand is still relatively low, as the pandemic has caused an economic slowdown. As such, Malawi too may not see much long-term gain from low fuel prices. ™
Malawi has cut fuel prices twice in the last month.
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w w w . N E W S B A S E . c o m Week 19 14•May•2020