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FUEL prices have shot up by well over 100 percent to between $7 500 and $8 000 for a litre of both petrol and diesel in just a fortnight, in defiance of the regulated prices.

A survey by Herald Business this week showed that petrol and diesel prices had risen from around $4 000/litre two weeks ago to the current levels. In January, a litre of petrol or diesel cost about $3 000.

Service stations around Harare’s central business district are openly selling fuel at the ungazetted prices in flagrant contravention of the law.

The gazetted prices for petrol and diesel are pegged at $335 and $320 respectively. The prices have been in force since last year.

Fuel players cited the high cost of foreign currency to finance imports among other overheads as the biggest driver of prices.

However, international crude oil prices have relatively remained steady this year, with a barrel going for an average US$59.

No comment was immediately available from Energy and Power Development Minister Mr Mike Nyambuya, whose mobile phone continuously went unanswered.

Economists this week warned continued fuel increases would have far-reaching effects on prices of other commodities and services across the board.

Commuter omnibuses have already hiked their fares in line with the fuel price increases.

ZABG economist Mr David Mupamhadzi commented: "The starting point is that the market is reacting to expected policy change.

"However, this has not happened, and the longer the authorities take to implement the social contract the more the market will be driven by speculation.

"After talking so much about March 1 and failing to see any new policy on this date, inevitably, the market has gone directionless. A huge policy vacuum has been created, and this has to be addressed urgently.

"Authorities should come clean and announce an urgent statement that clarifies the position on prices and wages going forward, failure which could lead to further speculation."

Reserve Bank governor Dr Gideon Gono has proposed a social contract as part of a long-term economic stabilisation policy to run until the end of the year. Phase one of the social contract included a transitional freeze on all prices and wages, and was scheduled to last from March 1 until June 30 2007.

The social contract is designed to curb arbitrage opportunities in the economy, bring down inflation, trim the civil service and reopen the economy to the outside world.

But all this is yet to happen, opening the way for a free-for-all among producers, retailers and other service providers. Most of them have been unilaterally hiking prices in anticipation of the freeze.

There are now genuine fears that continued delays in implementation of the social contract will drive inflation even higher. Year-on-year inflation stood at 1 593 percent at the end of January while the Consumer Council of Zimbabwe’s consumer basket came in at over $600 000.

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