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Reserve Bank of Zimbabwe to release US$120m for fuel

by Steve Grays
04 Mar 2020 at 07:17hrs | Views
The Reserve Bank of Zimbabwe (RBZ) has earmarked US$120 million this month to import around 200 million litres of fuel for the general local currency market, with US$18,5 million letters of credit confirmed for immediate draw-downs.

The allocation is about 20 percent higher than the normally required US$100 million a month to help end recent shortages.

RBZ manages the foreign currency required for importing fuel while for the general local currency market. Oil import companies buy the forex through their banks to pay the cost of landing the fuel in Zimbabwe, a cost that hovers around US$0,60 a litre.

The energy regulator then sets the maximum retail Zimbabwe dollar price. Those licensed to sell petrol and diesel in foreign currency need free funds to import fuel.

The development follows several weeks of fuel shortages that have seen long queues, a flourishing black market and many kombi operators pushing up their fares. RBZ Governor Dr John Mangudya said in a statement last night that eight oil companies can start collecting their allocations from the National Oil Infrastructure Company depot today.

Under normal circumstances, he said, the allocated funding, administered by local commercial banks with help from the RBZ, should result in the disappearance of long winding fuel queues and end the shortages.

Allocations of the initial US$18,5 million are US$9,5 million, more than half the total, to Trafigura which supplies Puma, Trek and Genesis service stations, with Total allocated US$2,5 million, IMIG US$1,52 million, Petrotrade US$,1,25 million, Engen US$700 000 and Raven Energy US$500 000. Dr Mangudya expected that fuel imported using free funds under the direct fuel import facility would significantly improve fuel supplies.

"To ensure that the DFI facility is not abused, the Zimbabwe Energy Regulatory Authority (Zera) and the bank's exchange control division are finalising the establishment of a robust system to monitor all filling stations designated by Zera to sell under the DFI facility," he said.

Dr Mangudya said the US$120 million facility earmarked for fuel procurement, was more than enough to cover Zimbabwe's fuel needs, especially for March. Ordinarily, he said, Zimbabwe required US$100 million to pay for fuel imports enough to take through the country for a month.

Dr Mangudya, said the US$18,47 million availed under LCs facility can purchase a week's supply. Energy and Power Development Minister Fortune Chasi said Government was constantly making efforts to improve the supply of fuel in the country.

"Now, we will be able to know for example who accessed what and in what currency they sold that fuel because there are situations where people access our foreign currency on the formal system or formal allocation and they do whatever they want with that fuel without reference to the national interest," he said.

Minister Chasi said the new framework would enable Government to monitor and tighten the regulatory framework through ZERA. He said while information asymmetry was not the only bottleneck, this latest approach will help deal with some of the malpractices.

Minister Chasi said the environment was characterised by opacity of information. Meanwhile, the RBZ has dismissed as malicious reports alleging that it has been printing money to subsidise gold producers, leading to the depreciation of the local currency. This follows a story published by a local weekly citing unnamed sources.


Source - Herald

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