Zimbabwe: Why E20 blending will not help reduce fuel costs ?

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The recent announcement by the Government of Zimbabwe to move from a five percent ethanol (E5) blending ratio to a twenty percent (E20) mandate is being framed as a strategic intervention to stabilize fuel prices.

This narrative suggests that by leaning more heavily on locally produced ethanol, the country can insulate motorists from the volatile fluctuations of the global oil market.

However, a cold and clinical analysis of the official fuel price build-up data reveals a much darker reality.

This policy is not an economic cushion for the struggling Zimbabwean public.

Instead, it is a sophisticated mathematical illusion designed to entrench a monopoly and facilitate a massive transfer of wealth from ordinary citizens to a single, politically connected entity.

To understand why the government’s claim is fundamentally flawed, one must first look at the raw cost of production.

According to the Zimbabwe Energy Regulatory Authority price build-up effective 18 March 2026, the Free on Board (FOB) price—the cost of petrol when it reaches the port of origin, such as Beira—stands at US$1.09 a liter.

In a startling inversion of economic logic, the cost of ethanol is pegged at US$1.10 per liter.

Under any standard market condition, blending a more expensive product into a cheaper one would inevitably raise the final price.

If ethanol were truly the cheaper alternative the state claims it to be, market forces would naturally drive its adoption.

Instead, the government must resort to legislative force to ensure that this more expensive local product finds a buyer.

The only reason the final pump price appears lower when the blending ratio increases is because of the government’s own predatory tax regime.

Currently, imported petrol is burdened with an array of taxes and levies totaling over 85 cents per liter.

By the time this fuel reaches the Msasa depot, these taxes have inflated its cost to over two dollars.

The government then performs a clever sleight of hand by not applying these same crippling taxes to the ethanol portion of the blend.

By replacing twenty percent of tax-heavy petrol with tax-exempt ethanol, the government can claim a reduction in the pump price.

This is not a saving born of industrial efficiency or low production costs.

It is a saving born of the government’s choice to stop taxing a specific portion of the fuel.

If the state were truly concerned about the cost of living, it could achieve a far more significant and honest price reduction by simply lowering the astronomical levies on petrol itself.

By forcing an E20 mandate, the state is effectively granting a captive market to Green Fuel and its owner, Billy Rautenbach.

In a competitive economy, ethanol producers would be forced to innovate and lower their prices to compete with imported petroleum.

In Zimbabwe, the monopoly status of the Chisumbanje plant removes any such incentive.

The producer knows that the law requires every liter of petrol sold in the country to contain their product.

This legal guarantee allows the supplier to maintain high prices without fear of being undercut by competitors or international trends.

The motorist is not a customer in this transaction but a hostage to a policy that prioritizes the profit margins of a tycoon over the purchasing power of the people.

Beyond the murky waters of monopoly pricing and tax manipulation, there is the undeniable reality of physics.

Ethanol is fundamentally less energy-dense than pure gasoline.

It contains approximately thirty-three percent less energy per gallon.

When the blending ratio is increased to twenty percent, the overall energy content of the fuel in the tank drops.

For the motorist, this translates directly into reduced mileage.

A car running on E20 will travel fewer kilometers than one running on E5 or pure petrol.

This means that even if the pump price drops by a few cents, the effective cost of travel remains the same or even increases.

Motorists will find themselves visiting the fuel station more frequently to cover the same distances.

The government’s celebrated “price reduction” is therefore a hollow victory.

It is a classic case of being penny-wise and pound-foolish.

The technical implications for vehicles in Zimbabwe cannot be ignored either.

Most older vehicles on our roads were not designed to handle high concentrations of ethanol.

Ethanol is hygroscopic, meaning it attracts water from the atmosphere, which can lead to corrosion in fuel lines, tanks, and engine components.

It also acts as a solvent that can degrade plastic and rubber parts in older fuel systems.

By mandating E20, the government is forcing a fuel type onto the public that may lead to increased maintenance costs and shortened engine life for thousands of vehicle owners.

These hidden costs are never mentioned in post-Cabinet briefings, yet they represent a significant financial burden on the very citizens the government claims to be protecting.

The lack of transparency surrounding the ethanol production costs in Chisumbanje remains a major point of contention.

There has been no public audit or independent verification to justify why Zimbabwean ethanol remains so expensive compared to global benchmarks.

In countries with mature ethanol industries, the product is significantly cheaper than petrol, which provides a genuine economic incentive for blending.

In Zimbabwe, the price of ethanol appears to be arbitrarily set to ensure maximum profitability for the supplier while remaining just under the tax-inflated price of imported petrol.

This “crawling peg” pricing model ensures that no matter how much global oil prices drop, the local ethanol monopoly remains shielded from competition.

If the government were serious about stabilizing fuel prices, it would move toward liberalizing the ethanol sector.

Opening the market to new players and allowing for independent imports of ethanol would create the competition necessary to drive prices down.

More importantly, a total review of the fuel tax structure is long overdue.

Zimbabwe has some of the highest fuel taxes in the region, which act as a massive drag on the entire economy.

High fuel prices increase the cost of transport, which in turn increases the cost of food, manufacturing, and basic services.

Addressing this through the artificial lens of ethanol blending is a temporary fix that ignores the structural rot in our energy policy.

The transition to E20 is a strategic move to secure the financial interests of a politically connected few.

It relies on the public’s lack of technical knowledge regarding energy density and the complexities of the fuel price build-up.

It is an attempt to mask a heavy tax burden with a local-content narrative that does not hold up to scrutiny.

The facts are clear.

Ethanol is currently more expensive than imported petrol.

The “savings” are a result of tax exemptions.

The fuel is less efficient and potentially damaging to vehicles.

Until the government addresses the monopoly in Chisumbanje and the predatory taxes at the Treasury, the Zimbabwean motorist will continue to pay a premium for a policy that offers them nothing but a mathematical illusion.

In conclusion, the claim that increasing ethanol blending will reduce petrol prices is a fallacy.

It is a policy that ignores the laws of economics and physics in favor of political patronage.

The true path to affordable fuel lies in competition, transparency, and a reduction in the state’s own tax hunger.

Without these reforms, E20 will remain nothing more than a windfall for the few and a burden for the many.