Govt moves into bulk fuel imports

The intermittent fuel supply bottlenecks occasionally witnessed in some parts of the country have jolted Government into considering venturing into bulk fuel importation to ensure steady availability of the commodity.

Government liberalised the fuel sector in 1999 following the supply challenges experienced at that time, and allowed several players, including locals, to participate in bulk fuel importation.

Top multi-national firms such as BP & Shell, Caltex and Total, used to dominate the fuel sector before its democratisation.

Currently, 57 companies are understood to be licensed to engage in bulk fuel importation but only six are thought to be active players, resulting in occasional shortages.

Through Genesis Energy, a subsidiary of the National Oil Infrastructure Company of Zimbabwe (NOIC), Government wants to get back to the space given the centrality of fuel in the country.

Experts say industry — mining, manufacturing and agriculture, among others — consume 60 percent of all fuel imported into the country, thereby making the sector critical.

Outgoing Permanent Secretary in the Ministry of Energy and Power Development, Mr Partson Mbiriri exclusively told The Sunday Mail Business after NOIC's 4th annual general meeting last week that the fuel sector is too important to be solely left in the hands of the private sector.

"Basically, Genesis is intended, once fully established, to focus on bulk importation of fuel," said Mr Mbiriri.

". . . 100 percent of our fuel is currently being imported by private players. Most of that being international companies. It exposes us as a country to lots of insecurity and we certainly cannot just sit back on account of the fact that we have liberalised the sector.

"Yes, it was liberalised when there were challenges with respect to accessing foreign currency but we need to prioritise the importation of fuel into the country."

He explained that any fuel stocks in the country should have a significant public ownership.

Government also wants a significant stake in fuel retailing, which is already being done by Petrotrade (Private) Limited, which was set up in 2010 after the unbundling of the then National Oil Company of Zimbabwe (Noczim).

Petrotrade has a few service stations across the country and has a US$15 million budget to erect 10 more in the next two years, to increase its footprint.

Said Mr Mbiriri: "We should equally have some significant market share in retailing. Remember, fuel is not just a strategic commodity, it is a security commodity and its availability can have a telling effect on the well-being of the country and for that reason, it is important that we participate in the sector as the public sector.

"Going forward, Genesis is envisaged as an important player to that end."

Genesis started fuel trading last year.

Meanwhile, as Petrotrade seeks to broaden its reach, Cabinet has proposed to partially privatise the firm.

Government wants to retain the majority stake in the business. The value of the stake to be sold is yet to be determined.

The process to hunt for a suitable partner has already started.

Said Mr Mbiriri: "Because of the sensitivities attendant to fuel, you may get an attractive offer but from the wrong person. Or you may get an attractive offer but from someone who you know for a fact is leading you up a garden path.

"So there should be these considerations going forward."

Last year, NOIC recorded a profit after tax of US$14,2 million and declared a dividend of US$3,5 million to Government.

The dividend was US$600 000 more than the US$2,9 million declared in 2016.

Revenue also increased by 101 percent to US $219 million last year from US$109 million in 2016.