Zimbabwe fuel price controversy: Diesel tax cut claim raises questions as pump prices rise

Fuel pump price Zimbabwe service station

By Southerton Business Times Desk

HARARE — Zimbabwe’s recent announcement of a US$0.54 per litre diesel tax removal has triggered widespread debate after fuel prices increased instead of falling, raising concerns over transparency in the country’s fuel pricing model. Motorists and businesses are questioning the credibility of the policy following the latest price adjustments by the Zimbabwe Energy Regulatory Authority, which saw petrol rise to US$2.23 per litre and diesel to US$2.11.

The government described the removal of diesel taxes as an “unprecedented fiscal sacrifice,” suggesting consumers would benefit from lower prices. However, analysts say the figures tell a different story.

Data from ZERA’s March 18 pricing structure shows petrol’s landed cost, including Free on Board (FOB) price, pipeline fees,, and financing, stood at around US$1.16 per litre at Feruka. Since then, global oil benchmark Brent crude has remained relatively stable, trading below the US$112 per barrel level recorded in mid-March. In recent weeks, prices have averaged around US$103 to US$109 per barrel, suggesting no significant surge in import costs.

Energy analyst Tendai Muchengeti said the pricing movement raises legitimate concerns.

“If the global benchmark has softened or remained stable, and a tax component has been removed, the expectation is that pump prices should decline. The current trend suggests other cost drivers or policy decisions are at play,” he said.

Economists argue that if the US$0.54 tax removal had been fully passed on to consumers, diesel prices could have dropped to approximately US$1.50 per litre, assuming other variables remained constant.

Instead, diesel prices rose prompting speculation about whether the tax cut was implemented in practice or offset by increases elsewhere in the pricing structure. A Harare-based fuel retailer, who spoke on condition of anonymity, said pricing remains difficult to interpret.

“We rely on official price structures, but there is often a gap between what is announced and what is reflected at the pump. Customers are asking questions we cannot answer,” the retailer said.

At the centre of the debate is Zimbabwe’s “replacement cost” pricing model, which allows fuel to be priced based on anticipated future import costs rather than historical purchase prices.

Critics say this approach can lead to higher consumer prices, particularly when global oil prices are volatile. Economic commentator Persistence Gwanyanya noted that while the model is designed to ensure supply continuity, it can create perception challenges.

“Replacement cost pricing is common in some markets, but it must be applied transparently. Without clear communication, it risks eroding public trust,” he said.

Beyond taxes, Zimbabwe’s fuel pricing structure includes blending costs, distribution margins, and regulatory fees. Analysts also point to the role of ethanol blending in petrol pricing, which can influence final pump costs depending on supply arrangements. The Reserve Bank of Zimbabwe has previously emphasised the importance of maintaining fuel supply stability, even if it requires pricing mechanisms that anticipate future costs.

For consumers already grappling with high living costs, the price increases have intensified pressure on household budgets and transport expenses. Commuter omnibus driver Shepherd Chikomba said rising fuel costs are being passed on to passengers.

“When fuel goes up, fares go up. There is no other option. But people are already struggling,” he said.

Economists and industry stakeholders are now calling for greater transparency in fuel pricing, including regular publication of detailed cost build-ups by ZERA. They argue that clearer communication would help rebuild confidence and ensure that policy measures, such as tax adjustments, are understood and reflected in pump prices. As Zimbabwe navigates ongoing economic challenges, the fuel pricing debate underscores the broader need for accountability in policy implementation and answers to questions that continue to linger.

Zimbabwe fuel prices 2026