HomePoliticsGovt to open up fuel sector

Govt to open up fuel sector

Vincent Kahiya

GOVERNMENT and fuel companies on Tuesday discussed a new pricing regime which would allow direct foreign imports and ease the energy crisis gripping the country, the Zimba

bwe Independent heard yesterday.

Last night industry sources said government wanted to deregulate the industry and take fuel off the list of controlled commodities. This would enable the private sector to import fuel and sell it at a sustainable price. Government is expected to make a major policy announcement on fuel any time from today.

The talks come amid reports from industry sources that the National Oil Company of Zimbabwe (Noczim)’s Msasa depot has virtually run dry.

Sources close to the Tuesday meeting said Energy and Power Development permanent secretary Justin Mupamhanga would not commit himself to implement proposals by industry for a new tariff structure. But the sources say government could quietly let private importers bring fuel in.

Fuel companies want the government to allow them to import fuel using a preferential rate of US$1:$1 500 and then add a nominal 20% charge on the landed price. Marketers want the price of fuel to be aligned to the prevailing exchange rate.

The marketers, sources said, also want the government to put in place policy measures to even the playing field and kill off the black market by removing the subsidy on fuel. Fuel sold on the black market is bought at the controlled price, which is subsidised by the state.

At a price of US 40 cents a litre, petrol would cost $600 plus 20% ($120) which translates to $720 a litre under the proposals. Fuel is being sold for as much as $2 500 a litre on the black market due to critical shortages.

The price of fuel went up in March by 300%, resulting in a mass stayaway which shook the establishment. Since then government has been reluctant to effect new increases.

Fuel industry players in March warned the new price of fuel would not improve the supply side because it was still sub-economic. The situation has deteriorated further with the black market taking over the fuel trade.

Unscrupulous dealers, some with close links to the ruling Zanu PF, buy the scarce fuel from Noczim for resale at black market prices approximating $1 000 a litre.

Investigations by the Independent this week revealed that fuel was being sold at Crittal Hope in Harare’s Southerton industrial area which is owned by Chinhoyi MP Philip Chiyangwa for over $1 000 a litre.

At Cold Comfort Farm, run by Zanu PF in Tynwald, fuel is being sold at $1 050 a litre for a minimum purchase of 200 litres. The operation caught fire and was partly razed last week but business has continued.

Fuel is also being sold for $1 400 a litre at an industrial stand along Harare Drive in Prospect. Other operators are openly advertising their businesses in the daily newspapers.

One operator contacted by the Independent refused to divulge where their “depot” was saying they operated on a cash-on-delivery basis.

Contacted for comment on whether the fuel operations were legal, police spokesman Wayne Bvudzijena yesterday said the traders were violating the law.

“Fuel is still a controlled commodity and whoever is doing that is breaking the law,” he said.

Recent Posts

Stories you will enjoy

Recommended reading