Energy

Fuel queues resurface

LIVINGSTONE MARUFU


Fuel queues have resurfaced after more registered businesses including
city hotels were allowed to operate under strict conditions to combat
the spread of coronavirus pandemic.


The development comes after Zimbabwe’s fuel consumption
went down 40% due to restricted movement in and out of cities.


In a snap survey carried out by Business Times, most service stations
across the country had run out of fuel on Tuesday morning.


Zimbabwe Energy Regulatory Authority (Zera) acting chief executive, Eddington Mazambani told Business Times that the resurfacing of queues could be procurement issues but he said he has to verify with relevant authorities.


“I heard that queues have resurfaced in most service stations around Harare but I have to find out what the problem is.

However, over and above all the underlining issues, industry and businesses have reopened therefore demand will go high. What is needed is for us to procure more fuel to meet the increasing demand,” Mazambani
said.


The shortage saw the parallel market for fuel re-emerging after
going underground when the government implemented a total
shutdown to combat the spread of the coronavirus.


The illegal fuel dealers are selling the liquid at US$0.90/ litre.


Analysts suggested that due to huge differences between pump
price and that on the black market including the spike in the US dollar
rate might have forced fuel operators to divert their fuel to the black
market.


Prior to the lockdown stipulations, Zimbabwe consumed a total of four
million litres daily with petrol figures standing at 1.5m litres and diesel at
2.5m litres.


However, with the introduction of the strict lockdown measures, the
consumption went extremely down with fuel being available at almost
every service station.


The fuel crisis has stalked Zimbabwe for the past four years, making it difficult for the economy to be productive.


The economy requires around US$100m a month and US$1.2bn
to import fuel yearly.


Zimbabwe, which has no significant lines of credit to get the
US$1.2bn, mainly depends on gold, tobacco and platinum exports to
import fuel and other critical raw materials.


According to the Reserve Bank of Zimbabwe, 100% forex retention
threshold can never be achieved as long as the country needs forex to
import fuel.


Zimbabwe which has been allocating foreign currency to fuel companies for over a decade, weaned them off by letting petroleum companies seek their forex from the interbank platform to procure the precious liquid.


However, due to ineffectiveness of the platform and critical forex
shortages in the economy, the RBZ continues to supply funds to them.


RBZ has been issuing letters of credit processed through local banks
and guaranteed by the Afreximbank to ensure imports of the precious
commodity.


Daily consumption of both diesel and petrol in Zimbabwe rose
by 342% and 650% respectively between April and October 2018,
putting the government under huge pressure to provide adequate foreign
currency to pay for the commodity, pressuring the already struggling
government.


In 2018, petrol daily consumption increased to about 7.6m litres
from 1m litres per day while diesel consumption of diesel rose to about
7.6m litres daily from 1.9m litres per day, due to arbitrage opportunities
in the economy.


RBZ said the country is consuming more fuel than normal given the industry’s low capacity utilisation, underutilised land and small population.

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