Fuel price hike sounds 'death knell' in Zimbabwe (Gift Phiri)

   Economist John Robertson says the fuel price hikes will have a disastrous impact on the Zimbabwe economy and the lives of ordinary Zimbabweans.

  Gift Phiri -- The Zimbabwean

  Mar. 1, 2007 -- 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, inflation 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 for 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.

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