Fuel price hike sounds death knell (01-03-07

HARARE - The sharp hike in fuel prices is likely to sound the death knell for most companies, already weighed down by an acute shortage of foreign exchange and key inputs, top economists warned this week
Economic experts spoke as the pump price of a litre of petrol rose to a staggering Z$6,500, i

nflation shot to almost 1,600 percent, and the country electricity shortages woes intensified.
Energy minister Mike Nyambuya was not immediately available for comment. But economist John Robertson said inflationary pressures had pushed up fuel pipeline costs, such as transportation and storage, resulting in NOCZIM selling fuel products at below procurement costs. The removal of subsidies by Reserve Bank governor Gideon Gono was another reason of the sharp hike in prices.
Robertson said the impact of the fuel price hikes, when fuel was already in very short supply, would have a disastrous impact on the economy and the lives of ordinary Zimbabweans.
“Everybody will be affected,” said Robertson. “We will be in a very serious predicament in terms of moving production goods, getting food delivered and moving coal, timber and heavy commodities to the factories. So, we will have a very serious shrinkage in the volume of business being done.
“Coupled with this is the fact that we’re now experiencing power cuts because South Africa’s (power parastatal) Eskom is getting very serious about being paid, we owe them so much money (and lack the foreign currency to pay the debt),” Robertson said.
He added that because of the energy crisis in Zimbabwe “we expect to see worsening shortages of consumer goods in the shops and shortages of export goods”. This would further aggravate the foreign currency shortage in the country.
The economic problems could not be fixed without solving the political problems besetting the country, Robertson noted.
The opposition Movement for Democratic Change (MDC) said the latest fuel price increase was a massive hike “just two months after another previous hike of 95 percent”.
“In real terms this increase means that for those vehicles which have 60 litre tanks the cost of fuel rises from $240,000 to $360,000. This is way above the net salary of a majority of ordinary Zimbabweans, even MPs,” MDC spokesman Nelson Chamisa said. – Gift Phiri

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