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Patson Mbiriri —
For many years, fuel was a controlled commodity in Zimbabwe and was imported via the National Oil Company of Zimbabwe. Noczim was responsible for all purchases and distribution, with private oil dealers procuring petroleum products from the parastatal.
Basically, that was the system. However, foreign currency constraints later presented challenges, making it difficult for Noczim to import fuel and sell it at the ideal price. It was clear that Noczim would eventually run itself to the ground if it continued selling the product at an unviable price.
Although the parastatal queued at the Reserve Bank of Zimbabwe for additional support, the situation became untenable. Government subsequently intervened by liberalising the oil sector, allowing private players to import fuel.
A challenge that emerged after liberalisation was that fuel that was moved through the pipeline from Mozambique to Zimbabwe often got stuck.
Another was that roads on Mozambique’s Pungwe Floodplain were in a bad state, yet a large quantity of Zimbabwe’s fuel was imported via that route.
Mozambique was the first to say, “We have a railway and pipeline, why don’t we use either of these two options instead of destroying our roads?”
Shortly afterwards, we introduced a 6 percent surcharge for anyone bringing the product via road, and this detoured imports to the pipeline.
Well over 90 percent of the product now comes through the pipeline. Over the years, we have remained with five major oil importers, predominantly international companies.
Local retailers can buy the product from our storage tanks, and mind you, it is possible that our storage facilities are the best in the region.
Feruka, Mabvuku/Msasa, Beitbridge and Bulawayo storage depots are all Government-owned. In addition, the private sector also has storage facilities.
When Noczim was dissolved, two Government companies were formed — the National Oil Infrastructure Company, which oversees fuel importation through the Beira pipeline and depots, and PetroTrade on the retail side.
Current fuel stocks
Fuel importers are licensed by the Zimbabwe Energy Regulatory Authority, and pay the relevant duties. At one point, we had roughly 120 small retail companies and quite a number of them tried to import fuel using road believing that was cheaper.
But when they did the math, the numbers did not tally as major fuel traders do not deal in litres but tankers. So, you need to be a big player. No supply gaps were experienced when there was adequate foreign currency.
However, the economy has slowed down and revenues have declined, raising major questions around sharing our little foreign currency cake.
The five companies I mentioned earlier import fuel, but the product cannot find its way onto the market unless we buy it from bonded storage.
It’s a case of “so-near-yet-so-far” because the fuel is there. It is on that basis that we have had challenges because foreign currency shortages have also affected us. However, measures are in place to avert a crisis.
A small component of the fuel price is referred to as Strategic Reserve Levy, and this is collected by the Zimbabwe Revenue Authority, ultimately finding its way to the Energy and Power Development Ministry.
We then purchase fuel for the Strategic Reserve through PetroTrade, making sure the nation has reserves in case of an emergency.
These reserves, set up in 2011-12, are used sparingly; in fact, we have only used that fuel in the Tokwe Mukosi and Muzarabani flood rescue missions.
So, this is part of the fuel we have in Zimbabwe. There is considerable storage in Beira as fuel that comes through the port is first stored there.
Eighty percent of all fuel that lands in Beira is consumed in Zimbabwe, while the remainder goes to Malawi, Zambia, Botswana and the DRC.
That storage basically relates to our requirements as Zimbabwe, and the fuel can reach Msasa, Harare, in four days. It’s unlike the previous situation when we would look for fuel on the high seas.
So, we have stopped banking on the private sector because we have fuel in Beira. That fuel and quantities stored elsewhere in Zimbabwe can reach any part of the country in a matter of hours, or a day at most, subsequent to payment.
It is on the basis of these facts that I maintain that the alarm bells we have been hearing over the weeks are far-fetched, far from the truth.
Zimbabwe has adequate stocks. The challenges are really about accessing fuel after payment and that fuel being pumped immediately into a tanker and then being transported to the relevant retailer.
Let me make it clear. Government will never allow a retracing of the incidents we had in the past. There has been a lot of improvement since we last had real fuel challenges. I don’t see us having a repeat of that.
In October/November 2016, we imported 125 million litres of fuel. This was our last available statistic, and as we speak, the pipeline is pumping more fuel into Zimbabwe. We are the largest market in the region outside South Africa, consuming 2,5 million litres of diesel and 1,5 million litres of petrol per day.
So we bring big business to Beira and they will continue to do business with us.
Plastic money
Rejection of plastic money (by some fuel retailers) has been overblown. It is really a monetary issue, though. The way we understand it is that some commercial banks have been allocating foreign currency on the basis of a retailers’ cash deposits in that financial institution.
If a retailer deposits, say US$100 000, the approach has been to give that retailer a big allocation that corresponds to that deposit. Therefore, the motivation for the retailer then becomes to accumulate as much cash as possible so that they can access higher foreign currency allocations.
This is something monetary authorities have addressed, I’m sure such challenges have become less, if not non-existent. In addition, we cannot rule out some unscrupulous retailers who are selling cash.
If you are selling cash at 10 percent, the motivation is to get as much cash as possible to oil those shady deals. I can say the situation was brought about by those who genuinely wanted to access foreign currency as well as underhand dealings.
Mr Patson Mbiriri is the Secretary for Energy and Power Development. He shared these views with The Sunday Mail’s Chief Reporter Kuda Bwititi in Harare on December 8, 2016.
Bongani Ndlovu
Online Reporter