Zim aviation priced out of market
ZIMBABWE’S fuel pricing has effectively priced the country’s aviation industry out of the market.
Investigations by the Financial Gazette have revealed that the pricing of Jet A1 fuel in Zimbabwe has plunged the airline industry in jeopardy, contributing to the unending economic downturn.
The fuel has been made so extraordinarily expensive that international airlines have stopped re-fueling in the country, preferring to either bringing their own fuel in containers or re-fueling elsewhere.
While Zimbabwe’s neighbours, for instance South Africa’s OR Tambo and Zambia’s Kenneth Kaunda international airports charge US$0,40 and US$0,43 per litre, Jet A1 fuel is retailing at about US$0,87 per litre locally, which is more than double.
The International Air Transport Association, representing 260 airlines that account for 83 percent of the total global air traffic, says the global fuel price for 2015 has so far averaged US$0,67 per litre.
Transport and Infrastructure Development Minister, Obert Mpofu confirmed that the country’s Jet A1 fuel situation has been a subject of discussion between him and the Energy Development Minister, Samuel Undenge.
Mpofu said: “This is of very grave concern to us.”
Zimbabwe’s Jet A1 fuel has been made expensive by the massive taxes and fees charged by the Zimbabwe Energy Regulatory Authority (ZERA) to help government generate revenue for the fiscus.
These include freight, duty, Zimbabwe National Road Agency road levy, carbon tax, debt redemption tax, strategic reserve levy, storage and handling costs (levied twice under administrative and distribution), clearing agency levy, financing costs, inland bridging costs, secondary transport costs and an oil company or dealer margin of seven prevent.
With Zimbabwe’s Jet A1 fuel costing US$0,20 more than the global price, this has serious negative ripple effects on the overall revival of the economy.
Recently, ZERA’s chief executive officer, Gloria Magombo, said they were reviewing the country’s pricing system with the view of coming up with alternative ways to determine local pump prices.
Industry players have been accusing ZERA of sleeping behind the wheel by failing to advise government on the dire economic consequences of a skewed fuel pricing regime.
Industry has also queried why ZERA has turned a blind eye to the operations of a cartel that supplies JetA1 fuel in Zimbabwe which includes Total, Zuva Petroleum, Engen and Redan.
“Why is it that the big boys with economies of scale are not passing it down to people on the ground?” asked one livid fuel industry expert.
“ZERA is complicit in these shenanigans because these are some of the things that it should be easily picking out and asking questions about,” he added.