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‘Fuel import liberalisation to ease forex demand’

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BY FIDELITY MHLANGA

BUSINESS and analysts say the move by government to liberalise fuel imports will ease pressure on forex demands and improve supply of the commodity across the country.

Zimbabwe relies on fuel imports which were previously centrally controlled by the Reserve Bank of Zimbabwe (RBZ), but on Tuesday government announced that it would allow mining firms, transport operators and large corporates to procure the product on their own to ease pressure on the central bank.

The southern African country spends at least $1 billion every year on fuel imports.

Economist John Robertson said the liberal approach was a step in the right direction, but government must negotiate new longer term fuel supply contracts.

“I welcome the more liberal approach, but I think government is admitting that it is out of its depth in trying to fix the problems. New longer-term supply contracts have been offered to Zimbabwe and the bigger question is: Why have we not accepted help from countries offering better deals? Robertson asked.

“Giving permission to dozens of direct importers to enter the field will mean dozens, perhaps hundreds of fuel tankers will sideline the more efficient fuel pipeline, but the advantage of readily available fuel will be appreciated by all. However, the country still needs a better long-term supply arrangement to be put in place.”

Another economist, Henry Masasire said the development would ensure the smooth flow of production without stockout disruptions.

“The erratic stockouts of the precious liquid had a negative effect on the productive sector as a lot of productive hours were lost in queuing for fuel.
Liberalising the importation of fuel will allow sustained availability of fuel to critical sectors such as mining as well as big conglomerates and other companies. This will also help the government to meet fuel demand for the public and other essentials. However, the current move by the government may be a clear indication that government’s forex coffers are drying,” Masasire said.

Zimbabwe National Chamber of Commerce chief executive Christopher Mugaga warned authorities not to impose exorbitant fees to private players willing to use the Feruka pipeline.

“We have a pipeline that is there. We need to know at what terms are they allowing the importer to use the fuel pipeline. We can’t cause congestion on our roads,” he said.

Confederation of Zimbabwe Industries president Sifelani Jabangwe said the development should not exert pressure on the newly-promulgated forex interbank market.

“We hope this will not exert more pressure on the newly introduced forex market such that it will exceed the one which existed before the liberalisation of fuel imports. Reliability and stability will mean that corporates will not have to wait for government. This means the private sector can ensure stable supply in line with projected requirements,” he said.

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