Zvikomborero Parafini, H-Metro Reporter
The Zimbabwe Energy Regulatory Authority and the National Oil Infrastructure Company have insisted on blending petrol despite the high cost of ethanol in comparison to unblended petrol.
The two entities were made to explain the rationale behind their insistence on continued blending of fuel that’s landing in Zimbabwe at $0, 38 per litre with ethanol that’s costing $1, 10 per litre to the Parliamentary Portfolio Committee for Energy and Power Development on Thursday.
ZERA’s acting chief executive officer Eddington Tapera Mazambani said the ethanol price since the beginning of mandatory blending in 2013 has always been at $1.05.
“The ethanol price ever since the beginning of mandatory blending in 2013, it was during the dollar era, it has been at $1.05 in Msasa and $0.99 cents in Chisumbanje and five cents was for excise duty for Government making it $1.10 or $1.04 respectively.
“The major drivers for our fuel price is our FOB, the price at which we get the fuel from the international market, we have very little say in that regard due to the size of our economy, our ability to secure funding to lock value so we have very little negotiating power in terms of setting the FOB price.
“The pricing model has been in operation for a long time, the major changes which continue to happen are the exchange rates, we started from 1:1, and we never used to comment on ethanol because everything was okay.
“We moved the exchange rate to where we are now so those movements obviously translate to a higher price, whenever there are changes in the duty amounts which are due to the Ministry of Finance, they impact heavily on the final price of the ethanol.
“There has been an outcry over the price of ethanol which has never changed since2013, I’m not sure why everyone is talking about it,” he said.
The issue if ethanol has become topical and in Zimbabwe’s case has been inflationary according the committee in comparison to the world prices, Brazil is $0.39, US $0.39, Thailand $0.45 and Spain $1.24.
Asked whether the regulator has gone to interrogate the cost structure of their producers of ethanol to see whether that’s the best for the country, or the entity just wants to burden the consumers, Mazambani said:
“We did an exercise in 2013 on the ethanol price and we did a report, our producers weren’t producing a lot so the overhead prices were high and currently we are engaging with the producers, Green Fuel and Ethanol Fuel Company of Zimbabwe to submit their cost structure so that we can interrogate it and establish the true cost of producing ethanol.”
The committee also questioned Mazambani whether it was not cheaper to import the ethanol since it’s cheaper outside Zimbabwe.
Mazambani said by doing so, Zimbabwe will be negating the National Energy Policy of 2012 and the National Renewable Energy of 2020.
“It is benefitting the country to use ethanol produced locally as it is now an import substitution and creates jobs in Zimbabwe,” said Mazambani.
NOIC board chairperson Engineer Mackenzi Ncube said blending is mandatory and Zimbabwe cannot continue relying on fossil fuels.
“We must continue interrogating the prices of ethanol, blending is mandatory we cannot continue relying on fossil fuels, other countries are moving away from fossils, ethanol is green fuel and the fact that its priced higher doesn’t mean it’s not relevant, if it was up to me, we would increase the blending regime, Sweden has moved away from fossils, they are now 45 percent electric vehicles because of the carbon footprint, we need to look at that.
“The carbon print is a huge factor that doesn’t justify the price of ethanol. Maybe we can use catalytic converters can also be used for our vehicles, we will not move backwards by removing the blend,” said Ncube.