HomeBusiness DigestWe'll not stand by and watch - Gono

We’ll not stand by and watch – Gono

THE government and fuel-importing companies are at war over prices. The standoff is likely to intensify with information that the government is toying with the idea of reintroducing price controls on fuel. Reserve Bank of Zimbabwe (RBZ) governor Gideon Gono spoke to our senior business re

porter SHAKEMAN MUGARI about the ongoing wrangle.

Mugari: Fuel companies are arguing that they will only sell fuel at the government’s recommended price if they get foreign currency from the central bank. Is the central bank providing foreign currency to the companies?

Gono: Not at the moment. We are only giving foreign currency to the National Oil Company of Zimbabwe (Noczim). The idea is that Noczim will then sell to the key sectors of the economy like farming, industry, public transporters and the other players. Noczim are the ones who do the configuration of what they need and then we give them the foreign currency to buy fuel.

Mugari: That means only Noczim is getting foreign currency for fuel from the RBZ. Did I get you correctly there?
Gono: Yes, that’s the current position. Only Noczim is getting the money to buy fuel for priority areas.

Mugari: Then where are the other fuel importers supposed to get the foreign currency at the official rate so they can sell fuel at the gazetted prices as the government is demanding?

Gono: If they are genuine fuel companies they must get it from the banks who are now keeping foreign currency on behalf of the exporters whom we have allowed to keep more of their foreign currency proceeds. We did that in the spirit and belief that these same companies will be able to share the foreign currency with others for the good of the country.

Mugari: But the fuel companies are saying they are not getting that foreign currency from the banks?

Gono: Then that means there are some exporters who are not willing to part with their foreign currency for the national good. Under normal circumstances they must be able to get the money because we believe there is the money.

But of course you realise that there are either some companies that get money from the banks and still sell at the black market rate and there are banks that are not allocating enough to fuel companies. 

Mugari: But governor, why not just allow them to get the foreign currency from the central bank directly like they used to?

Gono: It’s no longer the same anymore. We have allowed the exporters to keep 75% of their foreign currency receipts. That therefore means we are only remaining with 25 cents in every United States dollar that the country generates. Obviously that is a small figure. We have to share the little that we have and the best way to do it is through the national oil company.

Mugari: Are you therefore saying the exporters are not releasing their foreign currency to other key sectors of the economy?

Gono: That seems to be the case. We have tried our best to make them viable by allowing them to keep their foreign currency. It’s however saddening to note that they are not willing to share that foreign currency for the benefit of the whole country.

Mugari: So what are you going to do about it?

Gono: We are looking into the issue and we will carry out an investigation to see how banks are allocating their foreign currency to the fuel industry.

We might be forced to intervene and stipulate the percentage of the available foreign currency that banks can allocate to the fuel sector.

Mugari: That of course will be tantamount to interference?

Gono: But what can we do if the people are abusing the privileges that we have given them in good faith? They need to understand that such privileges come with responsibility.

Surely we cannot turn around the economy if people are saying “each man for himself”. It’s a selfish culture that we will not tolerate and will not just stand by and watch.

Mugari: Can you tell us why you removed the facility for people to buy fuel from local filling stations in United States dollars?

Gono: It’s because of the same people who abuse our good intentions. We realised that there were some people who were now abusing the facility to profiteer and engage in speculative activities.

Mugari: Can we have an update on the Bindura facility for a revolving fund that was signed recently?

Gono: The deal is going ahead as planned. In addition to the amounts that have come in so far under the deal, I am aware that another ship with about 17 million litres of product (petrol and diesel) has docked at the port.

Mugari: But that is not enough. For how long will Zimbabwe survive on such piecemeal deals?

Gono: Obviously it’s not enough but we will continue to come up with such strategies and deals until we get back to normal. Until then, we have to make do with the little that we have. We need to rationalise our resources.

Mugari: How much is the central bank giving to Noczim per week for fuel importation?

Gono: I cannot say exactly how much, but we continue to give ad-hoc assistance so that the country does not run dry completely. But obviously you realise that we now have a smaller cake to share.

Mugari: You are obviously privy to the discussion that happened between the government and fuel stakeholders before the new price was reached. Can you tell us what was agreed on?

Gono: What I know is that both parties involved agreed upon the new prices. Those prices took into consideration the new foreign exchange rate that we announced. They are enough for the fuel companies to make a reasonable profit on the product. 

Mugari: Then why do you think the fuel companies are now refusing to comply?

Gono: It’s the same profiteering that I have been talking about. We are not pulling in the same direction.

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