High Court orders Zera to suspend licensing fees hike

BY FIDELITY MHLANGA

The High Court has ordered the Zimbabwe Energy Regulatory Authority (Zera) to suspend its new licensing requirements for fuel companies after a successful challenge by indigenous firms, it has emerged.

The Indigenous Petroleum Association of Zimbabwe (Ipaz) recently filed an urgent High Court application challenging Zera’s notice to the petroleum sector of March 9, 2020 that hiked procurement licences by 8 600%, among other requirements.

Ipaz said the increase was grossly unreasonable, unconstitutional and, therefore, unlawful and would cause unlawful closure of their business and create a monopoly in the sector.

Quoting the High Court order in a notice dated March 20, 2020, Zera said it was suspending the requirement for petroleum companies to have 25 branded fuel stations, performance bond of $30 million as well as a hike of procurement licence fees to $2 million.

“Reference is made to the above subject, in particular your letter to the Zimbabwe Energy Regulatory Authority dated March 13, the contents of which have been noted. As you already aware, the High Court has since issued a provisional order to the following effect. That the following provisions of the first respondent’s (Zera) notice headed licensing of petroleum sector operations in 2020 date stamped March 9, 2020 be and are, hereby, suspended: (a) The requirement of 25 branded five stations (b) The requirement of a performance bond with a value of $30 000 000 (c) The requirement to pay $2 000 000 as the fee for a procurement licence,” a circular seen by NewsDay Business read.

“The provisional order was granted by consent with both parties undertaking to amicably engage each other with a view to possible settle the dispute out of court.”

Indigenous fuel dealers fear that Zera will increase the fees to unaffordable levels and elbow out indigenous operators as well as creating a monopoly in the sector.

Fuel players’ licences, which are renewed annually, expired on December 31, 2019 before the announcement of new measures on March 6.

Zera recently invited more fuel companies to sell fuel in foreign currency. This is yet another clear sign that the economy was fast re-dollarising despite claims by government that the country was de-dollarising the economy.

The local currency has been on freefall since the banning of the multi-currency regime in June last year.

Authorities also reduced duty on diesel and petrol imported by free funds by 50% and 44%, respectively.

Duty for petrol is now US$0,25 per litre from US$0,44 per litre, while diesel will be levied US$0,20 per litre down from US$0,40.

Zimbabwe has six major oil-importing companies including Ipaz, Zuva Petroleum, Puma Energy, Total Zimbabwe, PetroTrade (Pvt) Ltd and Engen Petroleum Zimbabwe.

Sakunda and Redan were key members of Ipaz until they were taken over by Singaporean-based Trafigura Group, one of the world’s leading commodity trading companies.

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