BY PHILLIP CHIDAVAENZI
GOVERNMENT’S decision to licence a number of service stations to sell fuel in foreign currency as the Emmerson Mnangagwa administration battles to rein in recalcitrant economic problems has irked public transport operators and motorists with no access to the foreign currency.
The development comes after the government also authorised Zimra to collect revenue in United States (US) dollars.
This week, the Zimbabwe Energy Regulatory Authority (Zera) invited more fuel companies to sell fuel in foreign currency following a similar nod to Zuva Petroleum last month after the government had banned the use of US dollar in the market last year.
Motorists who spoke to NewsDay Weekender said it was now more difficult to find fuel at service stations selling in local currency amid fears that much of the fuel was now being channelled to the black market where it fetched more.
A furious Harare-based commuter omnibus operator, Jason Mandizha, said it was problematic to sell fuel in US dollars to operators charging for their services in the local currency.
“Quite honestly, the economics do not make sense. It may seem cruel to charge $12 or $15 a trip, but if you can only get the fuel when you pay forex, or on the black market, where it is very expensive, what can you do? Such an economic model is designed to push small players out of business, simple,” Mandizha said.
He said government needed to find better ways to resolve the fuel crisis and ensure that sanity returned to the sector.
The authorisation of fuel companies to sell in hard currency is a testament of policy inconsistency and a clear message that the economy was redollarising.
His sentiments confirmed former Finance minister Tendai Biti’s assertions in an earlier interview with NewsDay Weekender that the current challenges in the economy were associated with government’s reluctance to fully redollarise.
“Look at the huge queues for fuel, the massive shortage of power, the massive shortage of basic commodities; look at the social crisis, the closure of hospitals and schools, inflation, growth in money supply over 300% from January to October 2019, so the government is already feeling the effects of the mad decision of introducing a currency when conditions did not exist that can sustain a local currency,” Biti said.
Social commentator Robert Mhishi said as long as they were sectors that were allowed to trade in foreign currency, it was going to be difficult to rationalise trade in the country as every other entrepreneur would peg their prices in US dollars.
“This accounts for the serious price fluctuations that we are seeing now simply because the prices in local currency are just chasing the dollar,” he said.
“It is going to be difficult to tell traders to sell in bond notes because they will tell you that they are buying their fuel, which is a key cost driver, either in foreign currency or on the parallel market were prices are very high.”
He said it was in the best interests of both the government and the population to officially re-dollarise.
“I foresee a situation whereby we will be back to the US dollar because the market sets the pace. And from what we see now, it’s the same thing that happened back in 2009. By the time the government officially adopted the multi-currency regime, the market had already dollarised.”
The current situation, according to Biti, seemed designed to reduce a section of the population into paupers, while others smiled all the way to the bank.
He said there was a lot of confusion in the market because of the different currencies in official circulation.
“If you look at the Financial Bill number 3 of 2019 or the 2020 budget statement, three quarters of the revenue measures that were passed in the Finance Bill, government legalised and authorised itself to collect tax in US dollars, whether VAT (value-added tax), capital goods and levies and duty or any form of tax. It’s madness that you pauperise others, but you are trying to protect yourselves by continuing to collect and legalise the US dollar, that’s the madness of this regime,” the former Finance minister charged.
“So, we effectively have four currencies, the US dollar which is legal in certain sectors and multi-currencies which are not illegal for all of us, then we have EcoCash, then you have the bond note, then we have the RTGS. What kind of country is that?”
Several economists have also indicated that licensing more fuel dealers to trade in foreign currency could send conflicting signals following the government’s drive to de-dollarise.
Last month, the Reserve Bank of Zimbabwe instructed Zera to register all fuel service stations with free funds that could be used to import fuel for sale in foreign currency.
Charging goods and services in foreign currency was outlawed last year through statutory instrument 142 of 2019, which restored the Zimbabwe dollar after a 10-year hiatus, following the scrapping of the local unit, which had been ravaged by hyper inflation.
Zimbabwe has six major oil-importing entities that include the Indigenous Petroleum Association of Zimbabwe Ipaz, Zuva Petroleum, Puma Energy, Total Zimbabwe, Petrotrade (Pvt) Ltd and Engen Petroleum Zimbabwe.
Sakunda and Redan were some of the key members of Ipaz until they were taken over by related companies, Puma Energy and the Singaporean-based Trafigura group, one of the world’s leading commodity trading companies.