LCs delayed maturities affecting fuel supplies: Magombo

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 Staff Writer

Government says the fuel shortages, which have resurfaced in recent weeks were mainly due to the delays in the processing of Letters of Credit from the Reserve Bank of Zimbabwe. However, according to Energy and Power Development permanent secretary Gloria Magombo, fuel supply is set to improve next week.

In an interview, Magombo said the fuel situation would improve next week after the Reserve Bank of Zimbabwe facilitated funding for the product.

“We have been having foreign currency challenges because the letters of credit have been taking time to mature, therefore leading to a shortage of fuel on the market,” Magombo said.

Letters of credit have a maturity date that is linked to the expected time of delivery of the goods that would have been supplied.

The African Export Import Bank (Afreximbank) early this year availed US$255m letters of credit to Zimbabwe for fuel imports and the production of basic commodities in a bid to ensure adequate input supplies to the local market.

The LCs work as revolving funds from the Afreximbank and will be recycled for three. The LCs  reduce the burden on the various lines of credit that Zimbabwe is currently enjoying as it will utilise and replace the funds within a period of three months.

Magombo added: “The delays in the maturity of LCs therefore left the RBZ with an option to look for cash, which in most instances would not be readily available. Therefore, we anticipate that the fuel situation is going to improve in the next one week. The situation is not that there is no fuel in the country, the fuel is there and bonded; but what is needed is money to pay for that fuel.”

Where fuel is available, some fuel companies sell in foreign currency, with a litre of petrol selling at about US$1.40. For those selling in local currency, petrol is fetching at ZWL$3.40 per litre while diesel fetches ZWL$3.30 per litre.