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Last Updated: Thursday, 28 August, 2003, 16:23 GMT 17:23 UK
Zimbabwe ends fuel controls
Fuel queue in Zimbabwe
Fuel shortages worsened after a deal with Libya collapsed
Fuel prices in Zimbabwe have risen by up to 500% after the government announced that it had ended price controls.

Private companies will now be allowed to import fuel in a bid to end the fuel shortages which have plagued Zimbabwe for four years.

The president of the Zimbabwe Congress of Trade Unions, Lovemore Matombo, said while the new move was likely to improve supplies, it would also trigger price increases of all basic commodities, making life harder for ordinary consumers.

Zimbabweans are already facing rampant inflation of up to 400% on many commodities.

But economists say the benefits of getting factories working again will outweigh the additional inflationary pressures caused.

"The move looks very positive for the economy," a leading economist on Africa told BBC News Online.

If private oil companies are allowed to sell directly to the public then that should solve the supply problem and allow key manufacturing industries to function again, the economist explained.

With the end of price controls, diesel that used to cost 200 Zimbabwe dollars (25 US cents) a litre will now be sold at 1,060 dollars (US$1.32) while the price of petrol has risen from 450 (56 US cents) to 1,170 dollars (US$1.46).

Dual-fuel

The government's chronic lack of foreign currency has left it unable to afford to import the fuel the country so desperately needs.

The shortages had led to a thriving black market, where prices were even higher than the new rates.

FUEL PRICE RISES
Diesel: Was Z$200/l
Now: Z$1,060/l
Petrol: Was Z$450/l
Now: Z$1,170/l
Earlier this week, police seized petrol and diesel from a company owned by a senior member of President Robert Mugabe's ruling Zanu-PF party.

The company was accused of selling the fuel at prices far above the official level set by the government.

The state-owned Herald newspaper said police impounded 35,000 litres of fuel from Comoil, owned by Saviour Kasukuwere, a member of the Zanu-PF politburo.

The country's fuel shortage worsened after a trade deal with its main supplier, Libya, collapsed in November 2002.

Crisis

Business leaders have been calling for an end to price controls and the state monopoly on fuel imports in order to increase supply for some time.

Queue outside bank in Harare
Zimbabweans also have to queue at banks to get cash
The fuel crisis has forced motorists to queue for hours to buy the limited stocks available, while many businesses have been forced to shut down.

Apart from fuel shortages, the country is struggling with a widespread cash shortage, inflation of almost 400% and unemployment of about 70%.

Zimbabwe's main opposition party blames President Robert Mugabe for the mismanagement of the economy during his 23-year rule.

Mr Mugabe blames international opponents for sabotaging the economy because of his controversial policy of seizing white-owned farms.

There is already some doubt as to whether private firms really will be allowed to import and sell fuel freely, with many analysts adopting a wait-and-see stance.




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