ZIMBABWE’S biggest ethanol producer Green Fuel is now selling the commodity in hard cash and accepts only transfers to its nostro foreign currency account accompanied by letters from the clients’ banks confirming the existence of funds, it has emerged.
This comes after the government increased the mandatory ethanol blending of unleaded petrol by 100% from 10% to 20% last year.
The plan to introduce mandatory fuel blending was promoted by the government but fiercely criticised by the general public as it massively benefitted mostly Green Fuel. In principle, the government argued that mandatory blending would trim the country’s ballooning fuel import bill.
Green Fuel, which is majority-owned by business mogul Billy Rautenbach, is currently selling ethanol to fuel firms at US$1,10 per litre.
According to a circular from Green Fuel to its customers, the company noted that the new payments methods were necessitated by the attendant challenges presented by the currency volatility crisis gripping Zimbabwe.
If payment is not made in cash or transfers accompanied by letters from the client’s bank, Green Fuel said, it would not deliver the product.
“I refer to the above subject and note that our bankers are refusing to honour our payments as they are insisting that we should get value first from your respective banks that would have processed transfers to our accounts at Ecobank and BancABC,” Green Fuel said in a communique signed by an official identified as Percy Daka.
“Going forward, please note that we will not release product unless a cash deposit is done to our account in physical cash or the transfer is accompanied by a letter from your bankers that value has been transferred to our bank and they can honour our payments. We hope that the bank will promptly address the above issues,” Daka, whose designation was not given, said.
Green Fuel’s corporate social responsibility manager Nicole Rautenbach confirmed that the company was now demanding ‘real money’ from its clients.
“We accept all forms of legal tender or payment for ethanol, including the local unit; nostro transfers and foreign currency (which we request to be deposited),” Rautenbach said.
“However, under advice from our banks, we have requested that payments made by customers into our nostro accounts be accompanied by a letter from the customer’s bank confirming that value is being transferred in order for us to be able to honour our payments thereafter.”
In yet another correspondence gleaned by the Zimbabwe Independent, the National Oil and Infrastructure Company (Noic) also encouraged fuel firms to ensure that their accounts are fully funded when they make payments through transfers.
The correspondence reads: “Please be advised that with effect from November 16, 2020, invoices issued by Noic should only be paid through the banking details on that particular invoice.
“Kindly ensure that the account is funded for value and all amounts are made in time so that our team can assist you,” the state enterprise said through its Finance and Administration director Washington Gadzikwa.
Efforts to get a comment from Noic on what triggered the new payment methods were fruitless.
Banking sector sources told this newspaper that the new payment methods would present challenges to buyers who hold nostro accounts.
“By having values this means the client’s account needs to have sufficient funds to cover for payment and transfers.
“Nostro accounts are liquidated or converted to local currency at the going market rate after 30 days if the funds are not used up. There is also that 20% retention pronounced by the government on forex deposits,” a banking official, who spoke on condition of anonymity, said.
Authorities retain 20% of forex for every USD deposit done in company’s accounts.