Fuel shortages hit Zimbabwe
ZIMBABWE this week experienced widespread fuel shortages, which threatened to push the country down a slippery slope to levels reminiscent of a pre-dollarisation crisis that ruined the economy and forced government to ditch the defenceless local currency in 2009.
This was despite the central bank claiming it had increased foreign currency allocation for fuel imports from $7 million to $10 million weekly.
Most fuel stations in the capital ran out of either diesel or petrol since last week, an assessment of the situation by The Financial Gazette revealed.
A correspondent from Bulawayo said most fuel stations in the city had run out of fuel, but indicated that shortages had started over a month ago.
A correspondent in Mutare said the situation had not yet deteriorated, but noted that motorists were preferring fuel from Mozambique sold by informal dealers.
“People are preferring fuel from Mozambique, which is unleaded and is far much cheaper,” he said.
Zimbabwe sells petrol blended with ethanol of up to 10 percent.
A motorist from Kadoma who refuelled his car in Harare said only one pump station in Kadoma had fuel on Tuesday.
“I had to buy my fuel from containers,” he said, referring to roadside fuel dealers.
“The only service station that had fuel wanted Petrotrade cards,” he said.
Fuel and electricity imports are on top of a priority list put in place by the Reserve Bank of Zimbabwe (RBZ) last year to manage foreign currency allocation.
But the dwindling fuel supplies, which had hitherto camouflaged a widening crisis, could highlight that foreign currency allocation for the import of other products down the list had suffered.
Oil sector players said fuel shortages would have a domino effect on the economy.
They warned of widespread commodity shortages in the event that distribution of products was hampered by poor supplies, or production processes stalled as a result of fuel shortages.
Pump stations in most parts of Harare were either completely dry or had either petrol or diesel and not both.
“I think we are beginning to see signs of a crisis,” a manager at a fuel station in Harare’s central business district, which was out of diesel, said on Tuesday.
“I don’t think we are getting supplies today. We may soon be without petrol because we are not assured of supplies,” he said, declining to be identified.
RBZ governor, John Mangudya told the State broadcaster this week that any shortages could be due to logistical challenges.
But he warned players against “creating an artificial shortage” for personal benefit.
Apparently, the RBZ was expected to start drawing down on a $600 million facility from the African Export and Import Bank (Afreximbank), which was expected to ease foreign currency shortages that worsened after the closure of the tobacco selling season in August, this week.
The facility will largely support fuel and electricity imports, according to Mangudya.
Banking sector sources had said it would also support critical government obligations.
Mangudya announced last month that “critical imports of fuel and electricity are assured” under the Afreximbank facility.
Fuel imports, which topped the import bill during the first half of this year at $376 million, while electricity imports accounted for $121 million during the same period, bringing the total bill for both electricity and fuel imports to $497 million.
Demand for fuel has increased over the years due to an influx of privately owned public transport operators, especially commuter omnibuses, to cater for the increased number of people in urban areas following the deregulation of the transport sector, according to an earlier policy statement by the central bank.
Growth in the urban population due to rural-urban migration has put pressure on the urban transport system.
The liberalisation of trade has also seen a huge increase in the importation of relatively cheaper and affordable second hand vehicles, particularly from Japan, increasing demand for fuel.
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