Zimbabwe News and Internet Radio

‘Fuel importers to source own forex’

Treasury is developing a long-term model that will ensure multiple fuel importers source their own foreign currency and ease the burden on allocations from the Reserve Bank of Zimbabwe (RBZ).

Mthuli Ncube
Mthuli Ncube

Given the growing demand for fuel on the back of industry revival, the apex bank has recently been cornered to increase weekly foreign currency allocations from $10 million to about $20 million to petroleum companies so as to ensure constant supplies on the market.

Finance and Economic Development Minister, Professor Mthuli Ncube, said in a statement on measures to stabilise the economy on Monday that the pressure on the RBZ to source and allocate foreign currency for fuel consumption on a monthly basis was “enormous”.

As such, he said, a long term solution to create a world-class “regional fuel dry port” out of the Mabvuku Loading Gantry and Msasa Depot fuel storage facilities was being seriously considered.

“A strategy in this regard will be developed and new investors invited, so that in the end the multiple fuel importers can source their own foreign currency in the market,” said Prof Ncube.

“The vision for this inland fuel port will turn it into a vital regional fuel port that will serve neighbouring countries. An additional pipeline could also be built from Beira to the fuel storage facility in order to increase capacity.”

Official statistics indicate that in the first four months of the year to April alone, the Reserve Bank had channelled about $474 million towards fuel importation, which was way above $383,1 million allocated by the bank during the prior comparative period.

Fuel tops the ladder of Zimbabwean imports along side industrial machinery, vehicles, pharmaceuticals, cereals, chemicals, iron and steel and fertilisers.

Due to suppressed domestic production, the country has been battling a ballooning import bill and widening trade deficit.

A recent report released by Zimstat shows the country’s trade deficit for the six months to July 2018 went up 36 percent to $1,5 billion from the comparative prior year as imports continue to grow at a faster rate than exports.

The import bill for the six months to July went up by 26 percent to $3,4 billion while exports also went up albeit at a slower pace of 21 percent to $1,9 billion resulting in a trade deficit for the six months to July of $1,5 billion up from $1,1 billion prior year comparative.

Prof Ncube said the concept of a “dry fuel port” was an important economic development issue. In that regard, he said, his ministry would work closely with the Ministry of Energy and Power Development in order to realise the vision for a dry fuel port for the region. The Chronicle