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High Court blocks big eight fuel monopoly

by Staff reporter
05 Jun 2020 at 09:13hrs | Views
THE 2020 licensing of fuel-import companies has taken a dramatic twist after the High Court declared null and void the Zimbabwe Energy and Regulatory Authority (Zera)'s decision last month to licence eight big firms.

This was after indigenous players filed an urgent application challenging the issuance of the licences.

On May 5, Zera communicated a list of top eight licenced fuel companies to the Zimbabwe Revenue Authority (Zimra), muscling out indigenous players in the process.

Indigenous Petroleum Association of Zimbabwe (Ipaz) filed an urgent High Court application seeking to overturn Zera's decision. They were also pushing for the relaxation of the licensing conditions, which favour the "Ivy League" of fuel importers.

The term Ivy League originally refers to a group of the most prestigious colleges in the United States.

Zera, Energy and Power Development minister Fortune Chasi and Zimra were first, second and third respondents, respectively.

"The notice issued by the first respondent dated 5 May 2020 and headed 2020 licenced Fuel and LPG importers be and is hereby suspended. The first and third respondents be hereby interdicted from giving effect to the notice referred above," read the judgement by Justice Tawanda Chitapi.

"The applicant's members be and are hereby allowed to continue operating using their 2019 licenses."

According to the court, the fees and conditions imposed by Zera were unfair.

The new licensing conditions which Ipaz is opposed to include a ZW$2 million annual fee, increased from ZW$23 000 last year, a $30 million performance bond as well as proof to show ownership of 25 sites.

Another condition is to disclose the volume of fuel pumped over any of the periods 2016, 2017, 2018 or 2019.

This is not the first time the indigenous players have approached the court over the issue.

When Zera announced the 2020 licensing requirements in March prior to shortlisting fuel firms, Ipaz approached the court, challenging the conditions. They argued that they were unfairly geared towards advancing monopolistic behaviour on the market.

The court in March granted a provisional order directing Zera and indigenous players to reach consensus and resolve the licensing conditions impasse, but no consensus was arrived at.

Indigenous players are unhappy that Zera, despite knowing that consensus had not been reached, went on to instruct Zimra to bar indigenous entities from importing fuel.

"The applicant in this regard averred that after the meeting of 30 March, 2020, it was necessary for the applicant (Ipaz) to consult its membership in regard to proposed conditions and requirements which the first respondent intended to impose. The first respondent (Zera) proceeded nonetheless to write the letter to the third respondent (Zimra) without advising the applicants of each such decision and in the process took them by surprise," read the court papers.

Indigenous players highlighted that Zera's actions of unilaterally barring them without notice had affected their fuel trucks which were caught in transit and forced to park at the border posts, incurring hefty demurrage costs among other ancillary charges.

"Zera undertook to publish new conditions after consultations which it did not do but instead unilaterally directed Zimra to deny permission to applicant's members to clear their imported fuel into Zimbabwe on the basis that the applicants were not licenced. The new conditions were not produced to the court and were allegedly published through WhatsApp," the court document reads.

"The first respondent (Zera)'s conduct in just directing the third respondent to bar fuel imports by applicant's members on account of their not being licenced when no licensing conditions relating to them had been published was grossly unreasonable," the indigenous players argue.

The big eight oil companies that had been granted procurement licences are Total Zimbabwe, Glow Petroleum, Ram Petroleum, Genesis Energy, Vivo Energy, Zuva Petroelum, Sakunda Petroleum and Redan Petroleum.

Ipaz members own, lease and supply 260 service stations nationwide with a combined tank minimum capacity of 12 million litres diesel, 8 million litres petrol, and 1,4 million litres paraffin.

Source - newsday

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