The Sunday News
THE Government has released $20 million to buy 44 million litres of fuel to deal with stock-outs of the commodity.
Demand for the precious liquid has risen significantly in the past six months, as diesel consumption has jumped to 4 million litres per day from an average 2,5 million, while petrol consumption has grown by 100 percent to 3 million litres.
Local petrol consumption is notably 1 million litres more than the average daily demand in Zambia (at 52 million litres per month), whose population is more than 17 million. Finance and Economic Development Minister Professor Mthuli Ncube said authorities were aware that the chaos in the sector was being worsened by the price differential for the commodity existing across borders and within the country owing to parallel market exchange rates.
“Basically, on Friday last week, we authorised the drawdown of $20 million to deal with the crisis and those funds were made available yesterday (Thursday), because it takes a few days (to reflect) . . . so that should enable us to receive about 44 million litres on the back of that release. That is only a blood transfusion to deal with the fuel crisis,” said Prof Ncube.
Fuel prices before yesterday’s review ranged between $1,32-$1,36 per litre for diesel and petrol — which presumed a 1:1 exchange rate between the US and RTGS/bond note — translated to prices of US41 cents and US43 cents on the parallel market, where the exchange rate is 1:3. The discrepancies naturally created arbitrage opportunities in the market, as speculators hoarded the commodity for resale on the lucrative black market or to sell across borders. Already, there have been reported cases where fuel tankers allegedly smuggling fuel have been confiscated in neighbouring Zambia.
It is believed that Government was essentially subsiding the local market and paying heavily through hefty foreign currency allocations to the sector. The Reserve Bank of Zimbabwe (RBZ) recently doubled foreign currency allocations to fuel dealers from $10 million to $20 million per month.