Shortage-hit Zim has large fuel stocks
RBZ governor, John Mangudya
ZIMBABWE has fuel stocks that could last up to the end of January next year, despite shortages that have resulted in several pump stations running out of petroleum products in the past few weeks, sector sources disclosed this week.
The fuel, they told the Financial Gazette, is currently held in bonded warehouse at the National Oil Infrastructure Company of Zimbabwe (Noic) facilities in Msasa and Feruka in Mutare.
A bonded warehouse is a customs-controlled warehouse for the retention of imported, dutiable goods. They are kept in bond until the duty owed is paid.
Although products or goods can be brought into the bonded warehouse in huge volumes or large numbers, there is a drawdown facility that allows release of smaller amounts.
Sources said the bonded warehouse arrangement was between international oil firms and Noic. The international oil firms were bringing fuel into Noic’s facilities for purchase by local petroleum companies.
But the local fuel companies were failing to secure foreign currency for the fuel, resulting in sporadic fuel supplies in the country.
Impeccable petroleum industry sources said the fuel held in the bonded warehouses had been shipped into the country by five global oil traders. These are Glencore, Independent Petroleum Group, Trafigura, Engen and Total.
One source said the five firms had shipped huge quantities of fuel into the country and these could last up to the end of January.
Noic, a State-owned firm, pumps the fuel into the country from Beira in Mozambique on behalf of the five international traders.
Permanent secretary in the Ministry of Energy and Power Development, Partson Mbiriri, told the Financial Gazette this week that the country had enough fuel but admitted the bulk of it was in bonded warehouse.
He said petroleum firms did not have the foreign cash to buy the fuel.
“Whereas the allocations continue to improve, the challenge of inadequate foreign exchange to meet the demands of the fuel sector and other key economic sectors remains, hence the Reseverve Bank of Zimbabwe (RBZ)’s war cry for the generation of more foreign exchange,” said Mbiriri.
RBZ governor, John Mangudya, said Zimbabwe was currently spending between US$50 million and US$60 million monthly in fuel imports, 43 percent less than what the country was spending on fuel last year at US$106,3 million per month.
Mangudya disclosed that the country consumes between 120 million litres and 135 million litres monthly, slightly more than the 106,7 million litres of fuel per month the country was importing last year.
The reduction in the monthly bill suggests that the country may have benefitted from the slump in international oil prices.
Global oil prices have been declining since June 2014 from around US$115 per barrel to about US$47 per barrel as of this week.
It is expected that the price of oil will remain depressed as the Organisation of Petroleum Exporting Countries has decided not to cut production.
The price of oil is critical in today’s world economy, given that oil is the largest internationally traded commodity, both in terms of volume and value.
Government liberalised the fuel sector in 2008, allowing individuals and private companies with free funds to source petrol and diesel offshore for sale on the local market.
But recently, due to foreign currency shortages, the RBZ put in place a priority list in terms of which banks allocate foreign currency for imports.
Although fuel suppliers are among companies on top of the priority list, the current supply problems highlight a tightening foreign currency situation within the banking sector.