Govt allays fuel shortage fears

Government has assured the nation that there is enough fuel in the country and that there is no need for panic buying of petroleum products by motorists. This follows reports of fuel shortages at some service stations that triggered panic buying in recent days.

In a statement yesterday, Energy and Power Development Minister Simon Khaya Moyo said the fuel situation was under control.

He said there had been a steady increase in the demand of fuel in the country attributed to an upsurge of economic activities.

Minister Khaya Moyo also explained developments on the international market that have a bearing on the local supplies of fuel.

He attributed fuel price increases witnessed in the past few weeks to international market forces.

On the availability of fuel, he said Government had strategic stock meant to cushion the nation in the event of supply challenges.

"I want to assure the nation that there will be adequate fuel supplies throughout the country," said Minister Khaya Moyo.

"The Government urges consumers not to panic buy and horde petroleum products which may result in artificial shortages. There will be always adequate fuel supplies throughout the country."

"The fuel supply situation in the country is a manifestation of market forces in the petroleum market at international level. In 2017, OPEC members and non-OPEDC members countries led by Russia, agreed to cut the oil production output to clear the global glut of crude oil. The main reason for cutting production was to arrest the continued downfall of crude oil prices which was then on the downward trend with the lowest price of crude being US$43 per barrel in June 2017.

"Following the cut in production, the price of crude oil has been on an upward trend. From June 2017 to April 2018, brent crude oil prices have increased to US$74,75 per barrel. This trend is expected to continue up to the end of 2018."

Minister Khaya Moyo said the current impasse between the United States of America and Iran might also disrupt crude oil supplies as Iran is a major producer of crude oil.

He said Government was monitoring the fuel price increases obtaining in the country.

"The fuel prices follow the same pattern as that of the crude oil prices, noting that there is a one-month lag," said Khaya Moyo.

"This has seen the price of petroleum products increasing last month in tandem with the crude oil prices. Zimbabwe as a price taker, has experienced fuel price fluctuations similar to the patterns shown by International FOB prices.

"The only difference emanates from the initial drop in prices in January 2018, which was a result of a reduction in the duties charged on petrol and diesel by the Government."

Minister Khaya Moyo said petrol consumption increased by 22 percent in the last months while diesel increased eight percent.

He said although the Reserve Bank had been allocating US$10 million per week to fuel suppliers, the amount is not in tandem with the recent increase in fuel demand.

"The fuel allocations from the RBZ have not increased to match the increase in consumption," said Khaya Moyo.

"This therefore means that the US$10 million allocated per week is now procuring less quantities of fuel than required, given the current demand.

"Consumers should not panic as the Government has strategic stock meant to cushion the nation in the event of supply challenges. Furthermore, the international fuel traders continue to pump fuel in the inland bonded storage to ensure continued security of supply in the country.

"As of May 14, 2018, the third party stocks in bond in the country are adequate for the next 25 days for diesel and 14 days for petrol. This fuel belongs to international fuel traders.

"Local oil companies can only access this fuel upon payment for it in foreign currency," explained Minister Khaya Moyo.

He said ethanol production expected at the end of this month would also lead to resumption of fuel blending that could also result in fuel price reduction.