Mnangagwa's net closing in on fuel dealers

The net is closing in on fuel dealers who stand accused of abusing their foreign currency allocation from the central bank amid revelations a syndicate of Zambian fuel smugglers was [on Wednesday] nabbed across the Zambezi holding at least 40 000 litres of fuel smuggled from Zimbabwe.

The fuel had been smuggled with the assistance of their Zimbabwean partners.

It is such leakages that have seen demand for fuel in Zimbabwe double in recent weeks. This has forced Government to cast its net wider for fuel supplies, having recently concluded supply deal with two major foreign fuel suppliers, according to Energy and Power Development Minister Joram Gumbo.

Funds set aside to import fuel are also expected to be increased by 60 percent, Gumbo added.

An anti-fuel smuggling operation, being treated sensitively, could claim the scalps of top politicians and businessmen believed to be abusing their influence and proximity to power.

This will trigger a brutal battle that could end the careers of top politicians as cartels in the sector are running it in mafia style for the control of the lucrative business.

Intelligence in recent weeks briefed Gumbo on the sophisticated manoeuvres used by unscrupulous fuel dealers to abuse foreign currency and advised on the possible remedies.

This has raised questions around his commitment towards improving the fuel supply situation in the country and at the same time Government's commitment to stamp out corruption and abuse of resources.

A top Government official said fuel had become contentious in Government with plans to plug leakages seen ruffling feathers of powerful cartels in the business. These cartels comprise fuel dealers, Government officials and politicians who enjoy some monopoly in the sector.

"You find trucks that pass through Zimbabwe into South Africa, Zambia and DRC are all buying fuel in Zimbabwe. Now they buy more fuel than ever because ours is cheaper at current black market rates.

"As a result, dealers are selling coupons outside the country to these truckers, some of them own hundreds of trucks and this is a lot of money. At times they even carry containers to make sure they only consume our fuel and this means the dealer gets foreign currency and they just come to use the coupons here, the country gets nothing," the Government official said.

Information at hand suggests the central bank in most cases pays suppliers directly for fuel then gives local dealers invoices for collection. The dealers then sell part of their allocation outside the country for hard cash before returning home with part of the product for their pumps.

"They are taking advantage of our systems where there are no weigh bridges. What happens is they get for instance 30 000 litres then sell 20 000 litres in Mozambique even for under $1 per litre. Then balance is brought home, they sell that fuel back home and sell a portion of their foreign currency on the black market to make up for the sales," said a source close to developments.

"The issue is simple, the black market rate is 400 percent so imagine they sell $20 000 worth of fuel in Mozambique, to cash that with the RBZ they need to only convert $5 000 on the black market and play around with their books," added the source.

Another source within the Ministry of Energy and Power Development said recommendations were made for random checks at service stations during deliveries and at entry points into the country, but it has taken the ministry long to implement. Designated fuel selling points for foreign traffic in foreign currency only were also proposed.

Service stations have also been holding on to some fuel which is sold on the black market for hard cash.

Earlier in the week, some dealers were now getting directives from their head offices to start rationing fuel and sell everything they have in stock.

"We have been told to give $50 worth of fuel maximum to small cars and $100 for heavy vehicles and public transport. We are now under instruction to sell all the fuel that we receive and not reserve anything," added a fuel attendant in Harare's Msasa area.

Gumbo said consumption of fuel had gone up dramatically. "The consumption of our fuel has gone up now and we are consuming 4 million litres of diesel per day and 3,8 million of petrol per day from 2 million of diesel and 1,5 million of petrol per day since September,'" he said.

"We have also instructed RBZ to increase the foreign currency allocation to fuel importers from $25 million to $35 million and this has started to happen. This has been necessitated by the fact that the price of fuel has gone up on the international market.

"We are in the process of signing a fuel deal with two foreign companies to help in providing fuel to the country and this will be happening in the coming week. They will help us with a credit facility to procure the fuel," Gumbo said, adding smugglers were arrested in neighbouring Zambia.

"We had problem of black market in the fuel as I am coming from Zambia today where there is a case of Zambians who were caught with over 40 000 litres of fuel that they have bought from Zimbabwe and this is one of the major problems, we have a black market.

"The shortage of fuel is also our own making in terms of black market trading of the fuel. We have been receiving reports of people getting fuel from Zimbabwe to sell outside the country. Some trucks were found in a basement in Zambia containing tens of thousands litres of fuel and the culprits who appeared in court claim to have links with Zimbabweans."

Zimbabwe is facing a fuel crisis with queues at most service stations triggering the resurgence of the black market. Players told Business Times on Wednesday night that the situation was expected to improve starting Thursday although prices could go up.