Zimbabwe looking at introducing local crude oil refinery

Zimbabwe should seriously consider establishing a local crude oil refinery as a way of cutting the ballooning fuel bill, according to the Zimbabwe Energy Regulatory Authority (Zera).

Zimbabwe's fuel consumption has risen from an average 2 million litres daily in January to 4 million per day in October, putting a strain on the country's limited foreign currency, as well as fuelling the emergence of fuel queues.

The Reserve Bank of Zimbabwe (RBZ) has doubled foreign currency allocations to fuel dealers from $10 million to $20 million per month in the same period.

Presenting oral evidence before the Parliamentary Portfolio Committee on Power and Energy on Thursday, Zera acting chief executive officer Mr Edington Mazambani said Zimbabwe is better off with its own refinery.

Mr Mazambani also said Government can also consider rationing the scarce commodity, but he cautioned that this would not be a popular route.

It is believed that establishing local fuel processing capacity will cut the import bill substantially, develop regional export potential and create employment.

He, however, could not reveal the amount of savings to be realised assuming the nation decides to establish a refinery.

"There is definitely an increase in consumption of fuel, probably occasioned by the number of vehicular traffic on the roads and it's more pronounced in the capital," said Mr Mazambani.

"For petrol, we started in January at 1,6 million litres per day, it has since moved to about 3 million litres per day.

"We should, maybe, explore the setting up of a refinery to support downstream industry and also generate foreign currency when we export within the region.

"As a nation, we do have business proposal to look at the possibility of us setting up a refinery. Zambia is no longer operating their refineries, they are actually importing more of the finished product than crude oil, Botswana consumes the finished product, DRC. . . so it's a possible market which if we explore can actually support a business case to have a refinery in this country," he said.

Zimbabwe used to operate the Feruka Oil Refinery in Mutare which, however, mothballed in 1966. Government made efforts to revive the project in 2004 by Capref with a takeover proposal.

However, Mr Mazambani told Parliament that reviving the Mutare Refinery was ill-advised as it has since been overtaken by technology and, thus, resuscitating it could prove uneconomic.

"I am not really a technical person but that refinery was a Rhodesian project, technology has since moved. I don't think we can operate that refinery (or) resuscitate it to be economically viable," he said.

Before going the refinery route, the acting Zera boss said there is a need to revive a reliable public transport system so as to discourage people from driving personal vehicles.

He noted that the increase in vehicles is a result of the death of the public transport system, which is no longer reliable.

"(The other solution) is maybe to have a more reliable public transport system that will release the pressure because at the moment driving a car is no longer a luxury, it's really a necessity because of the absence of reliable public transport system," he said.

"So we think that if we were to introduce public transport system which is on time every-time, we will see more people opting to use public transport," said Mr Mazambani.

Speaking before the same committee, RBZ Governor Dr John Mangudya assured parliamentarians that the country will not run out of fuel this festive season as sufficient allocations for fuel purchases will continue to be availed.

Reports say there are about 1,5 million registered vehicles on the country's roads, some of which remain unaccounted for.