Last month President Emmerson Mnangagwa relaxed Covid-19 regulations
when he partially opened up the economy.
Demand for fuel spiked, long winding queues resurfaced, prompting Parliament to summon players in the petroleum industry to explain the obtaining situation.
Prominent personalities that presented oral evidence before the Elias
Musakwa-led portfolio committee in Energy included Zimbabwe Energy
Regulatory Authority (Zera) acting chief executive Edington Mazambani,
Reserve Bank governor John Mangudya, Indigenous Petroleum Association
of Zimbabwe (IPAZ) leader Aaron Chinhara and representatives of major
petroleum companies such as Total, Engen, Puma and Zuva Petroleum.
The meeting, which lasted three hours, exposed Zimbabwe’s regulatory
flaws as well as the seemingly growing animosity between the small boys
and big boys in the fuel sector. IPAZ during the presentation said there
was preferential treatment on major petroleum companies while the latter
dismissed these claims.
Zera on the other hand said while it was mandated to play the regulatory
oversight, conflicting statutory instruments were limiting its efficiency.
Mazambani said the outbreak of Covid-19 has resulted in the relaxation of
exchange control- allowing fuel stations to charge the commodity in hard
currency without getting any approval from the regulator.
He said before the pandemic only registered stations would sell fuel in United States dollars.
In April, the RBZ said Zimbabweans were now free to use free funds to buy basic goods and services.
Parliament failed to notice the legal challenges emerging from the ensuing
pieces of legislation. Now the same Parliament wants Zera to act and restore normalcy as more and more petroleum stations are now demanding payment of fuel in hard currency.
The disparity between fuel being sold in Zimbabwe dollars and that sold
in US dollars is so glaring. Now monetary authorities have to play a delicate
act of striking a balance of defending the value of the local unit and keeping
inflation under check. In real terms, at ZW$28 a litre, the commodity will
be costing less than half of its value in US dollars. Ordinarily, that will create rent-seeking opportunities for fuel companies buying the commodity using local currency before selling it in US dollars.
With no fuel marking, Zera said it could be difficult to track fuel.
The drama doesn’t end there. The energy regulator said it may require up to a month to complete procurement procedures before a contractor tasked to do fuel marking comes on board.
Mangudya said the central bank was issuing enough letters of credit to
import the commodity. Meanwhile, the chaos continues unabated and the
consumer will pay an arm and leg for US dollar fuel as the cheaper supplies