The fuel crisis has stalked Zimbabwe for the past four years, making it difficult for companies to be productive.
Persistent power cuts have increased the demand for fuel, worsening the crisis.
Reserve Bank of Zimbabwe (RBZ) governor John Mangudya told Business Times that the country needs to keep producing to earn foreign currency needed to import fuel, which accounts for a quarter of the US$4.8bn total annual imports.
“The country requires around US$100m a month and US$1.2bn to import fuel yearly and we are working flat out to ensure that the funds are readily available for the economy to be productive,” Mangudya said.
“Manufacturing needs a great deal of fuel, mining also needs a great deal amount of fuel and the generality of the population also need fuel to be productive in their various disciplines.”
Mangudya said Zimbabwe has no significant lines of credit to get the US$1.2bn but depends on gold, tobacco and platinum exports to import fuel and other critical raw materials.
This, he said, means that the 100% forex retention threshold required by exporters cannot be met.
The RBZ has been allocating foreign currency to fuel companies for over a decade but last year the Minister of Finance and Economic Development Mthuli Ncube weaned them and directed them to the interbank platform.
However, due to ineffectiveness of the interbank platform and critical forex shortages in the economy, RBZ continues to supply funds to them.
RBZ has been issuing letters of credit, processed through local banks and guaranteed by the Afreximbank, to ensure imports of the precious commodity. Last week, Zimbabwe Energy Regulatory Authority (Zera) acting CEO, Eddington Mazambani said RBZ had provided funds to enable oil companies to access fuel stocks that were already in the country.
Experts said the failure by the oil companies to access forex means the interbank trading platform has failed to provide forex for companies to import.
This has created some arbitrage opportunities for some black market fuel dealers which are selling fuel at US$1.20 per litre.
RBZ has instructed Zera to register all fuel service stations that have free funds which they can use to import fuel for sale in foreign currency to improve fuel supply in the country.
Mangudya said the central bank had given exchange control approval for Zera to receive applications from fuel companies that have free funds for direct imports to be sold in hard currency.
Selling of fuel in forex was outlawed last year through statutory instrument 142 of 2019, which restored the Zimbabwe dollar as the sole currency after a 10-year interval following the scrapping of the local unit, which had been ravaged by inflation.
Only a few designated fuel service stations could sell fuel in forex in terms of Statutory Instrument 212 of 2019, which allowed only guests of state and diplomats to buy petrol, diesel or other petroleum products in foreign currency.
Zuva Petroleum last week announced it will be accepting foreign currency for fuel payments at eight of the firm’s service stations across the country only 24 hours after the presentation of the Monetary Policy Statement which strengthened the dedollarisation programme.
The fuel stations are in Harare (four), one each in Bulawayo, Mutare, Gweru and Victoria Falls.
RBZ said direct fuel imports (DFIs) will help ameliorate fuel shortages in the country.
Daily consumption of both diesel and petrol in Zimbabwe rose by 342% and 650% respectively between April and October 2018, putting the government under pressure to provide adequate foreign currency to pay for the commodity, pressuring the already struggling government .
In 2018, petrol daily consumption increased to about 7.6m litres from 1m litres per day while diesel consumption of diesel increased to about 7.6m litres daily from 1.9m litres per day due to arbitrage opportunities in the economy.
Given the Zera US dollar charging matrix, consumption of diesel and petrol plunged by almost 1.5m litres and 1.8m litres per day respectively between January and February last year.