The Reserve Bank of Zimbabwe (RBZ) has arranged lines of credit for local banks on the back of the $600 million Afreximbank facility to ensure that there will be enough cooking oil and fuel supplies in the country.
BY TATIRA ZWINOIRA
RBZ governor, John Mangudya told the Confederation of Zimbabwe Industries breakfast meeting in Harare on Wednesday the central bank had assured cooking oil producers and fuel suppliers that there was sufficient foreign currency for the two sectors.
“Yes, we have assured cooking oil producers that there is sufficient foreign currency for them to produce all the cooking oil to supply to this economy, so it will be there.
We have also arranged lines of credit to be opened by local banks on the back of the Afreximbank line of credit so that there will be enough cooking oil and fuel in this economy. That is why right now they keep pouring fuel in the tanks — diesel and petrol,” he said.
“Government has kept it open so that even during the night, they continue to put fuel in those tanks because normally it was restricted from 6am to 6pm. No one was allowed to put fuel in the tank at night, so government has opened it up through the Zimbabwe Energy Regulatory Authority and ministry of Energy. We are happy about that, so they are putting fuel so that at least we will see whether there will be panic buying for the fuel that is there.”
Last month, Afreximbank and RBZ entered into a memorandum of understanding in which the Cairo-headquartered bank would provide a $600 million line of credit. RBZ will use the facility to quicken the processing of foreign payments.
RBZ has already drawn $25 million from the facility, made up of fuel ($20 million) and crude oil for cooking oil ($5 million).
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The lines of credit for the banks are expected to help them facilitate payments to foreign suppliers for their clients in terms of fuel and cooking oil considering they keep about 70 to 75% of the foreign currency generated in the country.
The dependence on fuel comes as Zimbabwe’s daily consumption for fuel is four million litres per day. In March 2016, Mangudya said in 2015, Zimbabwe’s imports of petroleum averaged $100 million a month, accounting for 23% of the nation’s import bill The Oil Expressers’ Association of Zimbabwe says the country spends $220 million annually in importing raw materials and crude oil for cooking oil.
This is despite oil producers having the capacity to supply 12 000 tonnes of cooking oil per month to meet the local demand of 10 000 tonnes.
The foreign currency needed for fuel and crude oil comes from exports, of which, Mangudya said, the country generated $4 billion in the first nine months of the year.
