Mixed reaction to fuel price increase

While consumers and trade unions slammed the Zimbabwe government's government's decision to double the price of fuel, the Confederation of Zimbabwe Industries (CZI) welcomed the move and said it could even have been higher. "We think it is a good move because it reduces the amount of [government] subsidies on the fuel price," Bernard Mafute, manager of economic research at CZI explained. "The last price increase was almost two years ago and given inflation and the depreciation of the Zimbabwe dollar on the parallel market, we believe that the increase should have been more than 100 percent to bring the price to a more realistic level. "It will be an adjustment though, a tightening of belts and could require a review of salaries," he added. Zimbabwe's January inflation figure reached 208 percent and the country has been battling through critical fuel shortages exacerbated by foreign currency shortages for the past few months. Mafute said that although the move would have an adverse inflationary effect on businesses forced to use formal markets, it would not have much of an impact on larger businesses who were already sourcing fuel and foreign exchange at vastly increased parallel market rates and had already built the increased costs into their price structure. The CZI, representing about 700 industries, including the manufacturing, retail and banking sectors, is part of the Tripartite Negotiating Forum (TNF) comprising government, labour and business established last year to formulate an economic rescue plan for the country. The first measures included price freezes and the devaluation earlier this month of the Zimbabwe dollar for exporters to ZD $800 per US $1. However, the ZCI's enthusiasm for the fuel price increase is not shared by TNF partner the Zimbabwe Congress of Trade Unions which says it is "surprised and disgusted" by the move. It said that while the ZCTU understood the general need for a price review, it was disturbed by the "utter disregard and disrespect" of the social partners and agreed processes and principles at the TNF. "It is ZCTU's belief that the issue of the price of fuel is still a subject of discussion and agreement by the responsible TNF Technical Committee, which is examining among other things the pricing, procurement of fuel and energy sector reforms. "Only on Monday 24 February, the technical committee on fuel at TNF agreed that the issue of a fuel price review should be dealt with on the basis of the recommendations of the relevant technical sub committee." Meanwhile, news reports said that weary commuters had already resigned themselves to the higher transport charges.