‘Exchange rate volatility straining fuel supply’

Patrick Chitumba, Midlands Bureau Chief
THE persistent exchange rate volatility facing the economy is creating arbitrage opportunities that make it difficult to restore efficient fuel supplies in the country, an official has said.

While the interbank rate remains fixed at US$1:ZWL$25 the parallel market rate was trading at average US$1:ZWL$67 as of yesterday. This development has seen some fuel importers and service stations taking the product to the black market where it is being sold at US$1,25 to US$1,50 per litre compared to the pump price of between ZWL$28 and ZWL$29.

Analysts say this trend is contributing to fuel shortages being faced across the country, leaving the motoring public stranded. Long winding queues have become the norm across cities and those service stations trading in forex have not made things better as they are changing prices overnight depending on demand.

Some garages selling in local currency are refusing payment through EcoCash or swipe insisting on cash taking advantage of desperate motorists.

There have also been accusations of bribes linked to individuals selling the fuel on the black market who are made to jump queues thereby causing chaos at some service stations.

Although the Zimbabwe Energy Regulatory Authority has increased pump price of diesel to $24,93 per litre and petrol to $28,96 per litre, demand has remained high.

In an interview National Oil Infrastructure Company of Zimbabwe (NOIC) chairperson, Engineer Daniel Mackenzie Ncube, said the exchange rate disparity between the interbank and black market was affecting fuel availability on the market.

“Firstly we are having issues regarding letters of credit, they are coming out in drips and drabs from the RBZ and hopefully they will increase allocations soon. If they do that maybe there will be more fuel on the market,” said Engineer McKenzie Ncube.

He said what has worsened the situation is that some service stations were diverting the fuel to the black market where they were making more money by selling the product in forex.

Engineer McKenzie Ncube, however, said Government was working on addressing the fuel challenges and hoped measures being put on place would ease the shortages soon.

“It’s something that we are working on and soon we will meet players in the industry to try and address this fuel shortage,” he said.