Econometric Evaluation of Policy Reforms in Zimbabwe’s Oil Sector: The Effects of Liberalization, Deregulation, and Diminished Government Control

Abstract

Zimbabwe’s oil industry has been experiencing oil supply constraints for decades and these failures prompted Zimbabwe to shift towards deregulation with the aim of improving efficiency and better performance. Nevertheless, the country has continued to face persistent fuel crises resulting in critical questions being raised about the actual impact of deregulation in Zimbabwe. Therefore, the study seeks to investigate the effects of deregulation on the performance of the oil industry in Zimbabwe. Consequently, a phenomenological research philosophy was adopted in this study in order to explore the lived experiences, perceptions, and behaviours of stakeholders in Zimbabwe’s oil industry concerning the effects of deregulation policy. A qualitative research approach was complemented by the use of self-administered and semi-structured questionnaires that included both closed and open-ended questions. The sample was selected using a purposive sampling technique and comprised participants from various workstations within the energy sector including policymakers, government agencies, distribution companies, and consumers resulting in a sample size of 50 respondents. The sampling strategy facilitated in-depth, stratified insights while balancing practical limitations. The data was then analysed using Qualitative Data Analysis method and was supplemented by SPSS where applicable. Thematic coding followed Seidel model which involved noticing, collecting, and thinking. Whilst, codes and themes were applied iteratively to capture stakeholder perspectives.  Results indicate that deregulation is widely regarded by stakeholders as the preferred policy option for the sector. Key perceived benefits include improved fuel supply and distribution, reduced fuel prices, heightened competition, increased participation of indigenous entrepreneurs, enhanced service delivery, job creation, operational efficiency, enhanced investment and government revenue. Despite these anticipated benefits, the full potential of deregulation remains unrealized due to challenges facing the oil industry such as the supply disruptions, geopolitical instability, infrastructure inadequacies, regulatory and fiscal weaknesses, corruption and poor governance and price volatility affecting affordability. The study also highlights a gap between policy expectations and on-the-ground realities, calling for further policy refinement such as embarking on export-oriented industries, reviving the railway system, expand the fuel pipeline network, expediting ZIMRA clearances and establishing a stable national currency. Conclusively, the study suggests that deregulation has positive effects on the performance of oil industry than regulating the industry and hence the need to adopt contestable market theory as it encourages efficiency by removing barriers to entry and exit such as sunk costs and contractual agreements.