Feature: Zimbabwe in fuel crisis

Source: Peoples Daily – China

The past week has seen tablets of “no fuel” at most petrol filling stations in Zimbabwean capital Harare, and there was virtually no petrol at service stations outside the capital.

Zimbabwe is now facing a serious fuel crisis due to shortage of foreign currency and low prices of petrol.

On Friday afternoon it was said that there was fuel at a petrol filling station at Fourth Street, where cars were immediately seen queuing for this precious liquid, which has increasingly become scarce.

In a few minutes, a fuel delivery tanker arrived. It off-loaded about 20,000 liters of fuel and vehicles began to assemble in a single line and the police were soon called in to calm the possibly explosive environment.

Two hours later, the service station management announced that the fuel has run out and grumbling drivers began to disperse.

Was it true that 20,000 liters of fuel have been sold already?

There comes the answer of some drivers. The fuel was still available, but would be sold to dealers who will in turn sell it on the thriving “black market” at inflated prices, although selling fuel on the black market and demanding bribes from desperate motorists is a criminal offense in Zimbabwe.

The government price for petrol and diesel is currently 3,600 Zimbabwean dollars (about 58 US cents at the official rate) a liter.

In South Africa, the forecourt price of both petrol and diesel is around 5 rand (84 US cents) a liter, which can be translated into 5,000 Zimbabwean dollars at the official rate and more than 15,000 Zimbabwean dollars a liter at the parallel market rate. The wholesale price of petrol in South Africa is 4.61 rand, or 4,610 Zimbabwean dollars at the official rate.

The fuel service station manager told Xinhua that after factoring in transport costs, fuel could be landed in Zimbabwe at around 5,000 Zimbabwean dollars if foreign exchange secured at the official rate was used.

“The government is therefore paying almost 1,500 Zimbabwean dollars (about 24 US cents) to subsidize every liter of fuel sold at service stations,” the manager said.

He added that Zimbabwe normally consumes two million liters of fuel daily. So skewed is the pricing structure in the country that a liter of fuel is cheaper than a bottle of mineral water which stands at 9,000 Zimbabwean dollars (about 1.45 US dollars at the official rate).

The manager said the price of fuel should be reviewed immediately.

“What the depressed price has done is to make our margins small and forecourt business unviable,” he said.

“Between October and March, there was about 4 million US dollars a week for fuel imports which was distributed between National Oil Company of Zimbabwe (NOCZ) and the Petroleum Marketers Association of Zimbabwe (PMAZ),” he said.

Now there was no foreign currency to import fuel and there was no petrol in reserve at the NOCZ’s holding tanks so that the situation was degenerating fast.

It is said that because of the country’s poor credit rating, Zimbabwe has in the last five years failed to secure lasting lines of credit to pay for fuel imports. Currently, the country is doing “spot purchases” from ships anchored off the Mozambican coast.

Zimbabwe’s fuel is grossly under-priced and the government has been paying billions of Zimbabwean dollars weekly in subsidies in a bid to suppress price increases of the commodity. A rise in the price of fuel is considered inflationary and could negate the government’s economic turnaround efforts.

It is also heard that the centralized procurement of fuel through the PMAZ and the strict surveillance of import license holders meant that individuals could not organize their own foreign exchange and bring in fuel.

The manager said “in the past one could go onto the parallel market, buy foreign exchange and then import fuel.”

“That explains why last year fuel was available but at different prices. That is no longer possible. If importers were given the go-ahead to import as individuals, fuel would become readily available again,” he added.