• Zimbabwe's fuel prices have been adjusted to US$2.11 per litre for diesel and US$2.23 per litre for petrol, making it one of the most expensive in Africa, driven by domestic policy factors
•  The mandatory ethanol blending programme, which requires petrol to contain 5% ethanol is a significant contributor to high fuel costs
• Interventions such as competitive ethanol procurement, rationalisation of petrol taxes, infrastructure rehabilitation, and regional fuel procurement through a SADC consortium to reduce Zimbabwe's fuel prices to a more competitive level

Sources:GlobalPetrolPrices.com

Harare-Effective 2 April 2026, ZERA set diesel at US$2.11 per litre and petrol blend E5 at US$2.23, citing a 33.16% rise in the diesel FOB price since the last review as a direct consequence of the Iranian strikes on Gulf energy infrastructure in March 2026. The revision is Zimbabwe's second major fuel price increase in under a month, following the March adjustment that raised diesel from US$1.77 to US$2.05 and petrol from US$1.71 to US$2.17. According to Global Petrol Prices, the April revision has placed Zimbabwe's petrol as the second most expensive in SADC behind Malawi, and among the top five most expensive on the African continent.

What the data shows is that Zimbabwe's fuel price was structurally elevated well before the current geopolitical environment. According to Global Petrol Prices tracker data, Zimbabwe spends over US$1 billion annually on fuel imports, representing approximately 4% of GDP, and imports 100% of its petroleum products. The same condition applies to Botswana, Zambia, Lesotho, Eswatini, and Mozambique, all of which price fuel significantly cheaper at the pump.

In March 2026, before Zimbabwe's second price revision of the year, Mozambique sold petrol at US$1.30 per litre and Zambia at US$1.36. Angola, an oil producer with active government subsidies, sold petrol at US$0.327 per litre. Zimbabwe at US$2.23 sits second only to Malawi in SADC.

Being a fully fuel-importing, non-oil-producing economy does not by itself explain a premium of US$0.89 per litre over South Africa or US$0.87 over Mozambique. The shared structural condition of full import dependency applies to most of Zimbabwe's SADC neighbours. The cost architecture that sits between the imported product and the final pump price is the distinguishing variable, and that architecture is a product of domestic policy decisions, not global market conditions.

All of these other countries import fuel, and the Middle East conflict affected all of them. Only Zimbabwe's fuel was already US$0.40 more than the regional average before the conflict began. The cost structure sitting between the imported product and the pump is the distinguishing variable.

According to ZERA's April 2026 fuel price build-up, the CIF Feruka price for petrol, the cost of the product delivered to the Feruka pipeline terminal in Mutare was US$1.2250 per litre. The final pump price is US$2.23. The US$1.00 difference between the CIF price and the pump price is where Zimbabwe's structural fuel cost problem lives, and a significant portion of it originates in the country's ethanol blending programme.

The government introduced mandatory ethanol blending as a foreign currency conservation and cost-reduction measure. Under the policy, all petrol sold in Zimbabwe must contain a prescribed proportion of domestically produced ethanol, currently at E5, or 5% ethanol content, with the government announcing an increase to E20 in response to the current supply pressures.

The stated logic is that substituting domestically produced ethanol for imported petrol reduces the foreign currency import bill and lowers the pump price through the substitution of a cheaper local input. According to market data compiled in late 2025 and early 2026, global fuel ethanol prices range between US$0.50 and US$0.70 per litre, with FOB Gulf prices at approximately US$0.50 and Brazilian FOB Santos prices at US$0.56 to US$0.60 per litre.

Green Fuel Limited, one of the dominant domestic ethanol supplier, sells locally produced ethanol at approximately US$1.10 per litre, At US$1.10 per litre, Zimbabwe's domestically produced ethanol is priced at between 57% and 120% above the global market benchmark. The product that is supposed to reduce the cost of petrol is itself priced well above what it would cost to import ethanol from international markets. At an E20 blend, 20 cents of every litre of petrol consists of ethanol priced at US$1.10. The weighted average cost of the blended product is therefore higher than the cost of pure imported petrol would be at current international FOB prices of US$1.1561, because the domestic ethanol component inflates the blend cost above what straight petrol importation would deliver.

The regulatory framework makes it illegal to sell unblended petrol in Zimbabwe, creating a mandatory captive market for every litre of ethanol that Green Fuel or Triangle produces. In a standard competitive market, a supplier pricing at US$1.10 per litre when the global market rate is US$0.60 would face immediate substitution from importers purchasing at the lower price. In Zimbabwe's mandatory domestic supply structure, that substitution pathway does not exist. The E20 mandate, which Vice President Constantino Chiwenga publicly endorsed following a visit to the Chisumbanje facility in March 2026, will mechanically increase the volume of ethanol that must be purchased per litre of petrol sold from 5% to 20%, quadrupling the mandatory ethanol procurement from the dominant supplier without altering the pricing structure.

According to data published by Billionaires.africa, the E20 transition would, at current ethanol pricing and consumption volumes, significantly expand the commercial revenues flowing to Green Fuel from the national fuel supply chain.

A competitive tender for ethanol procurement at import parity pricing, allowing imported ethanol to compete with domestic supply, is the structural change that would most directly address the pricing distortion. If domestic producers can supply ethanol at globally competitive prices, they would win the tender on merit. If they cannot, the blending cost would fall to the global benchmark rate, reducing petrol's pump price by between US$0.04 and US$0.08 per litre at E5 and between US$0.16 and US$0.32 per litre at E20.

According to the ZERA April 2026 fuel price build-up, petrol carries total taxes and levies of US$0.857 per litre. Diesel carries US$0.025 per litre. In the April revision, ZERA confirmed that the government removed all taxes and levies from diesel entirely, citing the need to protect the mining, agriculture, haulage, and passenger transport sectors from the full impact of the 33.16% FOB price increase. The tax differential between the two products following the April revision is US$0.832 per litre.

The removal of all taxes from diesel while maintaining petrol taxes at 38% of the pump price represents a direct cross-subsidisation in which petrol consumers fund the cost reduction for diesel users. Diesel is predominantly consumed by mining operations, commercial agriculture, heavy freight, and the electricity generation sector through diesel-powered generators during load-shedding. Petrol is predominantly consumed by personal vehicles, minibuses, taxis, and smaller commercial transport serving urban and peri-urban populations. The policy rationale for protecting diesel-intensive productive sectors during an external supply shock is grounded in the economic importance of those sectors to Zimbabwe's foreign currency earnings. The distributional consequence is that the cost relief provided to commercial operators is funded through higher effective prices for urban household transport users, commuters, and small businesses.

ZERA's April 2026 pricing statement disclosed that without government intervention, diesel would have been priced at US$2.65 per litre. The administered price is US$2.11, representing an implicit government subsidy of US$0.54 per litre. At Zimbabwe's estimated monthly diesel consumption of approximately 90 million litres, the monthly fiscal exposure from this price differential is approximately US$48.6 million, or roughly US$583 million per year if the differential and consumption volumes remain constant.

This subsidy does not appear as a named expenditure in the national budget because it operates as a price control below the market-clearing level rather than as a direct cash transfer. The mechanism through which the government absorbs the cost difference, whether through the operating margins of state fuel importers NOIC and Petrotrade, through deferred payment obligations to international fuel suppliers, through cross-subsidisation from petrol tax revenues, or through some combination, has not been disclosed in the ZERA statement or in publicly available fiscal data. The absence of a disclosed funding mechanism means that the subsidy's sustainability cannot be independently assessed.

Zimbabwe has managed fuel price controls below market-clearing levels before. The 2019 fuel crisis, which produced multi-day queues at fuel stations and widespread shortages, was partly attributable to accumulated deferred obligations to fuel importers under a price-control regime whose administered price had fallen materially below actual import costs. The current structure, an explicit US$0.54 per litre subsidy on diesel at a time when the diesel FOB price has just risen 33.16% carries structural similarities to the conditions that preceded that crisis. The additional complexity is that the government has publicly committed to maintaining the diesel price below its market-clearing level for an indefinite period while the Middle East conflict trajectory remains uncertain.

The data from across the SADC region shows that full fuel import dependency does not by itself produce the highest fuel prices in the region. Every SADC country except Angola imports all of its petroleum products, and every one of them prices fuel below Zimbabwe at the pump. The structural factors that distinguish Zimbabwe's cost architecture from that of its neighbours are identifiable and, in principle, addressable through domestic policy reform. Equity Axis Research identifies four specific interventions that data suggests could reduce Zimbabwe's pump price by an estimated US$0.40 to US$0.55 per litre, moving it to a price level broadly competitive with South Africa.

The first intervention is competitive procurement of ethanol at import parity pricing. Mandating an open tender process for ethanol supply, with imported ethanol permitted to compete against domestic supply, would introduce price discipline into the blending cost component of petrol. At a competitive ethanol price of US$0.60 per litre rather than US$1.10, the blending cost saving per litre of petrol would range from US$0.04 to US$0.08 at E5 and from US$0.16 to US$0.32 at E20. For this intervention to be effective, the mandatory domestic supply designation would need to be removed or modified.

The second intervention is the rationalisation of petrol taxes to competitive regional levels. A reduction in petrol taxes from US$0.857 per litre to approximately US$0.50 per litre, still higher in absolute terms than both South Africa's and Botswana's fuel tax levels, would reduce the pump price by approximately US$0.35 per litre. The annual fiscal revenue impact at current consumption volumes is approximately US$420 million, which would need to be weighed against the economic stimulus effects of lower transport costs across the economy, including reduced input cost inflation, higher productivity in logistics-dependent sectors, and a broader tax base generated by economic activity that cheaper fuel would enable.

The third intervention is infrastructure rehabilitation of the CPMZ Feruka pipeline from Beira to Mutare. According to the April 2026 fuel price build-up, the current pipeline transport cost is US$0.0589 per litre. The pipeline has historically operated below its design capacity due to underinvestment in maintenance and pumping infrastructure. Rehabilitation to full operational capacity, supplemented by regional agreements with Mozambique to expand throughput, would reduce reliance on road transport, which carries a higher per-litre logistics cost, and would improve supply route resilience during disruption periods. Industry estimates suggest that pipeline rehabilitation could reduce effective transport costs to approximately US$0.03 per litre.

The fourth intervention is regional fuel procurement through a SADC consortium arrangement. South Africa, Zambia, Mozambique, Botswana, and Zimbabwe purchase petroleum products from comparable global sources. A jointly negotiated procurement contract would increase aggregate purchasing volume and potentially improve FOB pricing through economies of scale, better payment terms from suppliers, and reduced risk premiums associated with smaller, higher-risk individual buyers. Zimbabwe's current sovereign credit risk profile imposes a financing cost on its independent fuel import arrangements that lower-risk regional counterparties do not face. Pooled procurement through a creditworthy regional vehicle could access pricing and payment terms that Zimbabwe cannot independently negotiate. The primary constraint is political, as governments across the region have historically been reluctant to cede procurement authority to a multilateral body.

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