Zimbabwe: Parliament Enacts New Petroleum Legislation
PARLIAMENT last week enacted the Petroleum Act that provides for the establishment of the Petroleum Regulatory Authority, which would oversee the operations of the industry and eliminate pricing distortions.
President Mugabe has since assented to the Act although it is yet to come into force.
However, it is hoped the new statute would bring sanity into the petroleum sector and avert further disharmony over fuel prices between the private sector and Government.
Key functions of the authority would include ensuring the provision of sufficient petroleum products for domestic use, granting licences to operators in respect of retailing or production, and procurement of fuel in Zimbabwe.
PRA will also seek to attain pricing parity in the industry, currently marred by a dual pricing policy that has fuelled inflation even further.
The body will fix fuel prices after consultation with relevant stakeholders factoring in the landed costs of any petroleum product at the base price.
Competition will be actively promoted, as monopolies should also be closely monitored while the National Oil Company of Zimbabwe would be charged with maintaining strategic fuel reserves.
It will also protect consumers against unfair pricing while a price stabilisation levy to cushion suppliers from regular fuel price fluctuations would also be set up.
Analysts say the PRA should provide permanent remedies to the chaos that has marked Zimbabwe’s fuel industry where individual dealers regulate self, or at best, disregard Government-instituted prices.
Currently, the pump price for petrol and diesel is anything up to $4 500 per litre although Government gazetted prices stand at $335 and $320 per litre respectively.
Fuel prices have risen sharply over the last month or two with independent dealers citing rising import costs, as the key drivers of the continued price spiral.
The Reserve Bank has also shown displeasure with arbitrage trading within the fuel sector that has had a ripple effect on inflation.
RBZ said last month: “These anomalies cannot be allowed to persist if the economy is to ride out of the current crisis.
“This is besides the fact that we cannot continue to expect a litre of water from Manyame River to cost more than a litre of petrol and diesel imported all the way from the Middle East.
“We have proposed a timetable for our political leaders to take this message to the people before that anomaly is removed as it is a source of inflationary pressure and enrichment of a few with access to Noczim.”
The beneficiaries of subsidised fuel were reportedly diverting it to the parallel market.
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