The Reserve Bank of Zimbabwe (RBZ) has said there is low uptake for fuel sold in foreign currency as motorists opt for service stations that sell in local currency, putting pressure on the demand for forex to import.
The development comes at a time when the central bank recently instructed the Zimbabwe Energy Regulatory Authority to register all fuel service stations that have free funds to import fuel for sale in foreign currency to avert fuel shortages.
RBZ governor John Mangudya assumed that the move would improve the fuel situation in the country but motorists still opt for Zimbabwean dollar charged fuel.
Motorists are opting to buy black market fuel for between US$1 and US$1.20 per litre against DFI fuel which is pegged at US$1.33 per litre.
Mangudya told Business Times that US-dollar fuel remains readily available and has few takers due to the scarcity of the hard currency.
“Every week, DFI [direct fuel imports] is imported so as the Zimbabwean dollar charged fuel but within hours upon arrival, the latter will be finished with motorists asking for some more because it is cheap,” he said.
“The fact that the DFI fuel is always characterised by small queues and is always readily available shows that the United States dollars are not in the market as most people would want to purport.”
Previously, only a few designated fuel service stations could sell fuel in forex in terms of Statutory Instrument 212 of 2019, which allowed only guests of State and diplomats to buy petrol, diesel or other petroleum products in foreign currency.
Zuva Petroleum was the first fuel dealer to announce it will be accepting foreign currency for fuel payments at eight of the firm’s service stations across the country, in Harare (four) and one each in Bulawayo, Mutare, Gweru and Victoria Falls.
While direct fuel imports (DFIs) will help ameliorate fuel shortages in the country, questions have been raised on whether allowing sections of the economy to sell in forex does not send wrong signals as the government pushes for dedollarisation.
Economists said the current gazetted fuel price in local currency reflects an element of subsidy, as the price equivalent to a dollar per litre, which may not be sustainable for DFI fuel.
The central bank was working on the exchange control guidelines for direct fuel imports by local companies with free funds (forex), but would not immediately provide details on exactly how this will function.
Fuel was being sold in foreign currency at various undesignated service stations for anything between US$1.25 per litre and US$1.50.
Zimbabwe has over the past two years struggled to meet its domestic fuel needs due to an acute shortage of foreign currency.
Mangudya said the apex bank has been issuing letters of credit, processed through local banks and guaranteed by the Afreximbank, to ensure imports of the precious commodity.
Zimbabwe imports 1.5 million litres of petrol and two million litres of diesel daily.
Mangudya said the continuous movement of the exchange rate on the market is a sign of low confidence in the economy and measures are in place to rectify that anomaly.
He said despite the belief that there is forex outside the formal sector, very few are utilising the greenback to purchase their goods.
Recently, RBZ chief said forex reserves have fallen to around 37% from above 47% last year, a signal that forex is slowly getting out of the system.
Analysts said given the running away black market rate, selling of fuel at ZWL$18.70 per litre is unsustainable and will create arbitrage opportunities in the sector as more people will buy to resell it.