Due to uncertainty around the global COVID-19 pandemic, demand for oil is falling and is doing so rapidly to a point where crude oil prices fell below zero for the first time in history on Monday. At the time of writing, the global crude oil price was US$26,06 per barrel.
However, historically, this has hardly translated to a reduction in local prices of fuel while other markets regionally have seen downward movements.
"I cannot pre-empt the final price for May 2020, we will use the FOB (free on board) of refined fuel up to end of April 2020 and any other considerations from government and other stakeholders. However, the fall in crude oil is expected to filter to the FOB prices of fuel imported into Zimbabwe," Mazambani told NewsDay Business.
In Zimbabwe's fuel cost build-up, the main determinant to the final pump price is the FOB price — the price at which fuel is charged by local traders as determined by international market forces at the port of delivery.
The FOB price is determined by S&P Global Platts, a leading global independent provider of information and benchmark prices for commodities on the energy markets for use, especially by regulatory bodies.
Locally, fuel is priced at $21,52 and $21,77 per litre of diesel and petrol, respectively.
"I hope you are aware that Zimbabwe imports refined fuel, not crude and that the fuel we use is imported in advance not spot purchase. Adjustments in fuel prices will be done according to the law. If there is any downward movement, it will be reflected in the next price review," Mazambani said.
He said according to Statutory Instrument 270 of 2019, Zimbabwe sets fuel prices monthly and the next review is due on May 5, 2020.
While Zimbabwe imports refined oil, the price of crude oil is still used to determine the final pump price.
This is because the refined oil is still derived from crude oil.
"Any adjustment in fuel prices will be done according to the law taking into account that the fuel in Zimbabwe now was procured before the fall in prices," Mazambani said.
He denied that when global fuel prices go down it tends not to reflect locally.
"I'm not sure where you get it from. Zimbabwe prices are adjusted once a month starting December 2019. Get a copy of SI 270 it will outline how prices for fuel are set and by when," Mazambani said.
