adminwe switched to hard currencies.
We saw the latest retreat into the past over the last week. There was a minor hitch on the sole pipeline that supplies most of our diesel and petrol.
This resulted in a temporary shortage of diesel, which was made worse by three factors, the trend by farmers to stock up at this time as finance becomes available, panic buying by too many other customers, and the usual efforts by small speculators to make a fast dollar.
What should have happened, of course, is that the public should have been told of the problem, and the length of the delay in pumping or at least the date when normal pumping would resume.
At the same time oil companies could have told everyone that they had some stocks to cope, and asked their diesel customers to go easy for a few days on orders until normal pumping resumed.
And the public could have not panicked, could have realised that since they pay for fuel in US dollars Zimbabwe was not likely to be short for long, and could have eased up on their orders for a few days.
No one really came out of the mess with their heads held high.
Of course, stocks held within Zimbabwe should be high enough so that the country can go for at least a week without deliveries.
That would be more than enough time to repair almost all pipeline faults or, if there was something really serious, organise alternative deliveries.
Petrol stocks were in this position. No one went without.
Diesel demand does rise at the end of October since most farmers use a lot of diesel to finish preparing their land for the new season and it looks as though the oil companies were caught flat-footed
and were living hand to mouth as they sold diesel as it arrived.
Energy and Power Development Minister Elton Mangoma finally started giving out figures and explanations yesterday. He should have been doing so earlier.
But he did make one valid point, on the financing of fuel stocks. We think that oil companies should as matter of business prudence have their own stocks on hand in Zimbabwe to cope with fluctuations in demand and cope with modest hitches in the supply chain.
Most developed countries do not have national fuel stocks or stocks held by the government except for their defence forces.
They expect that prudent businesses do their sums right and maintain adequate stocks. And most of the time they are justified. In fact the only time they are hit by shortages is when there are major strikes in the transport sector.
Zimbabwean companies face some extraordinary problems. Most are short of working capital, and borrowing rates are extremely high. So they tend to live from hand to mouth at the best of times.
Then they also face the problem that Zimbabwe is fed by a single pipeline; in countries with multiple pipelines one going down will not stop all deliveries. In Zimbabwe it does.
So we have to look at how larger stocks can be built up.
The Government does charge a tax of 1,5c a litre to fund the creation of national stocks, presumably owned by the Government but available for sale when certain shortages are triggered.
It will take, according to the minister, about three years to create stocks that are large enough to cope for a week’s demand, which implies that stocks are already being run down at times.
A tax that produces US$45 000 a day should within a few months bring stocks up to useful levels and fund the storage of those stocks.
We do not see why a commercial company cannot draw on those stocks in even a modest emergency, but would expect the drawdown to be done for cash, that cash being then immediately used to replace the central stocks.
The minister mentioned that major international companies were using cheap Zimbabwean storage to hold stocks for their regional customers, so presumably there is no reason why the same storage facilities cannot be used for commercial Zimbabwean stocks.
This opens the door to a lot more co-operation between the Government and the oil companies, large and small, to create and maintain national reserves that can be drawn on when we have the sort of hitch that hit the pipeline recently, or even when companies miscalculate a surge in demand as most seem to have done over farming needs.
Oil companies could build their own working capital and stocks by looking at coupon systems.
Most used to use these; now only one major company does, and it was noticeable that its customers suffered little during the shortage.
We know there were other problems with coupons, including a failure to back them with actual fuel in real tanks in Zimbabwe.
But surely the rest of the big four could at least think about them again; such large suppliers could easily be audited so that everyone knew they could always back their coupons with real fuel.
But at the very least the petroleum industry in Zimbabwe needs to work out procedures so that the mess that a minor technical hitch triggered does not happen again; or at least if it does the damage is minimal.
Online Reporter