HomeBusiness DigestGovt bows to international fuel prices

Govt bows to international fuel prices

GOVERNMENT yesterday bowed to local and international pressure on fuel pricing with Reserve Bank of Zimbabwe governor Gideon Gono allowing sales of the scarce commodity using foreign currency rates.

The move, aimed at subduing a

thriving black market in foreign exchange and coming into effect on September 1, will see designated service stations selling fuel at US$1 per litre. The move, coming barely a month after government announced a 300% fuel price hike, effectively frees the price of fuel per litre from the current $10 000 to about $17 500, Gono’s diaspora peg for one greenback.

This effectively means that the price of fuel will soon be determined by the US dollar parity and not what is gazetted by government.

Gono, along with his government compatriots, believes the strategy will end Zimbabwe’s six-year fuel shortages, linked to hard cash shortages.

They also think the action will help ease government troubles in sourcing foreign currency for petroleum imports, while also encouraging inflows of product through fuel companies.

“Over the past few months, the Reserve Bank has been conducting feasibility studies on the possibility of allowing some designated fuel filling stations to sell their petrol and diesel in foreign currency,” Gono said, while delivering his mid-year monetary review statement in Harare Thursday.

“With effect from September 2005, therefore, the motoring public can access fuel at designated service stations… at an initial price of US$1 per litre,” he said, adding chosen service stations would be announced by
Energy Minister Mike Nyambuya soon.

Government, it emerged yesterday, is also yet to enact laws permitting “free trade” in US dollars and other foreign denominations, as this infringes certain facets of the country’s foreign exchange laws.

Gono’s backdoor increase further placates a grumpy fuel industry, which has been yearning for a landed price of US$0,65 per litre or Zimbabwe dollar equivalent of $15 000.

By wringing the crucial fuel and exporter concessions from President Robert Mugabe’s government, Gono could not only have secured the fuel industry’s viability, but also won a major breakthrough in influencing policy ever since he took charge of the RBZ.

Meanwhile Gono suspended the Import Tracking Control Numbers programme with immediate effect.

He said the move is intended to allow free inflows of free funds that found their way into the offshore markets.

“Holders of funds from offshore sources are with immediate effect free to bring in imports particularly those of productive nature,” Gono said in his presentation of the monetary policy statement yesterday.

He said the exercise would be on a no questions asked basis.

However, Gono said the RBZ’s Exchange Control Unit will continue to carry out close surveillance to ensure that holders of corporate foreign currency accounts (FCA’s) do not abuse the privilege by importing trinkets, at the expense of essential productive usage of foreign exchange resources.

This is part of the RBZ’s desperate measures to raise foreign currency. Gono also suspended with immediate effect the 5% special exporters’ fund. — Staff Writer.

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