Something has got to give

FOR the umpteenth time fuel prices have again shot up since they first astronomically rose by 150% in January.

NewsDay Comment

Diesel went up 25% to $9,06 from $7,22 while petrol rose 19% to $9,01 from $7,55. The fuel costs come in the wake of government giving the green light for electricity tariff increases of 356% from 9,86 cents to 45 cents per kilowatt hour (kWh) for non-exporting businesses and 174% from 9,86 cents to 27 cents for domestic and agriculture consumers.

At this rate, it can only mean that something has to give in very soon because the ever escalating costs, especially for diesel, in a non-productive landlocked country like Zimbabwe, is not sustainable. Diesel is a key cost factor in industry given that road transport is the major means of moving goods.

The fuel costs also come at a time when the southern African nation is experiencing serious power outages that have seen industry resorting to diesel pumps to sustain the little production still happening. In June, Chamber of Mines president and Bindura Nickel Corporation managing director Batirai Manhando said: “Production statistics for the first four months of 2019 show that all key minerals recorded output declines of not less than 10% compared to the same period in 2018 due to power outages. The use of diesel generators, which are expensive to run, has led to an increase in the cost of production impacting negatively on the viability of the mining industry. The immediate implication of this is a decline in foreign exchange earnings from the mining industry and if the situation is not resolved, we will witness some marginal mines closing their operations in the next few months.”

We wonder what has been the effect to production costs for, not only the mining sector, but for the entire industry and commerce.

What is happening at the moment defies logic given what the government trying to achieve. The same government is holding the gun to the head of business not to increase their prices of goods and services while also demanding that business must increase its workforce’s wages when the companies are barely able to keep their heads above the water. Most companies that are still managing to produce are doing so using antiquated machinery that are now very expensive to run.

What government itself has given its workers as wage adjustments is nothing to write home about under the circumstances. It’s only a matter of time before something gives in.

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