Zimbabwe News and Internet Radio

I won’t resign-Gumbo

By Mugove Tafirenyika

Energy and Power Development minister Joram Gumbo has stuck to his guns, declaring that he will not resign despite pressure from stakeholders peeved by the worsening fuel situation.

Energy and Power Development Minister Dr Joram Gumbo
Energy and Power Development Minister Dr Joram Gumbo

This follows calls for his resignation for allegedly misleading the nation into believing that the country had enough fuel when long, winding queues have become the order of the day at pump stations.

Gumbo told the Daily News yesterday that he cannot throw in the towel for telling the truth.

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The Energy minister said the fact that there are queues at service stations countrywide does not follow that there is a shortage of the product.

He said the country has enough fuel at the Msasa and Mabvuku gantry held in bondage, which petroleum companies are able to access upon releasing payment for the product.

Gumbo said that stock had always been accessed by companies through provision of foreign exchange (forex) from the Reserve Bank of Zimbabwe (RBZ).

“People must understand one thing about the mandate of the ministry. Its mandate is fuel provision in the country, and I am telling people that there is enough fuel in the country and I stand by that even when they say I lie and I must resign. I can’t resign for telling them the truth,” he vowed.

Gumbo said the country has five major companies that bring in fuel at Msasa and Mabvuku depots since the industry was de-regulated.

Fuel retailers are then allocated foreign currency by the RBZ to enable them to access the product.

In the past, the central bank would release US$10 million per week, which was later increased to US$20 million weekly to match the demand for the product.

“You cannot access it if you have not paid for it but it is in the country so my stance goes and I still maintain that there are enough stocks of fuel in the country,” said Gumbo.

The former Transport minister said due to the fact that the international price of fuel has gone up, the money being released by the apex bank is no longer sufficient for petroleum companies to buy the same quantities of fuel needed to meet local demand.

Whereas fuel retailers used to buy 2,5 million litres of diesel and 1,5 million litres of petrol with $20 million per week, this is no longer the case.

What had also complicated matters is that Treasury had introduced a new tax for electronic transfers that had increased the cost of sales at a time when fuel retailers were not allowed to pass on the cost to the consumer.

Gumbo expects the situation to return to normalcy in less than a week now that Finance minister has said foreign payments are exempted from the tax, and that the RBZ has paid US$41 million to the fuel companies.

“What the RBZ had to do was to look back to say in order to maintain the same amount of fuel how much should I pay and I am glad to say he (central bank governor John Mangudya) has already paid $41 million to the fuel companies by Friday last week.

“The demand for fuel is because we opened the country for business which means more consumption of fuel because the economy is rising from its slumber…

“Because of the black market, foreign companies were now filling up (their trucks) here because of the bond rate to the US dollar hence the decision to say that foreign companies must buy in forex,” said Gumbo.

He said there was no reason for panic, saying petroleum companies have been picking up fuel from Msasa and Mabvuku.

“The queues are clearing; just give us a day or two. I have not said your service stations have fuel but that there is enough fuel in the country which must be accessed in a certain way and I have not lied,” he added.

Fuel queues started building up last week with outlets in Harare and Bulawayo having either run out or had long queues as motorists patiently waited for their turn to fill up their tanks.

At some outlets owned by Total, attendants only served motorists with pre-paid cards.

Other outlets refused mobile payments, preferring bank cards and cash.

Mangudya has said the fuel shortages had been caused by the introduction of a two percent tax on electronic payments last Monday, which meant oil firms would incur weekly bank charges of $400 000 for fuel imports but were not allowed to pass the cost to consumers.

The companies had stopped supplying fuel as a result, Mangudya said, but he added the situation would improve soon because the government on Friday night scrapped the tax on foreign payments.

It is not just Gumbo who has been under pressure to resign.

A section of society has also been baying for Mangudya’s blood, saying the RBZ governor had made an undertaking to resign should the bond notes introduced in 2016 fail to address the liquidity challenges facing the country’s economy.

Mangudya has been adamant that the bond notes have not yet failed because they have managed to increase exports by 35 percent in 2017 and 36 percent in the first six months of this year.

“Yes, I said if the bond note fails as an export incentive, then I will resign when I was asked the question by a reporter from the Sunday News of Bulawayo at the introduction of the export incentive scheme.

“Evidence on the ground shows that the export incentive scheme paid out in bond notes has been very successful. Exports grew by 35 percent in 2017 and by 36 percent during the first six months of this year.

“Tobacco, for example, at 250 million kilogrammes produced this year, is the highest ever produced in Zimbabwe, gold at 28 tons during the first nine months of this year is the highest ever produced in Zimbabwe over the same period.

“The same is true for the manufacturing sector, where a number of firms have increased exports. The success of bond notes as an export incentive is therefore evidence-based and that’s the reason I did not resign.”

Zimbabwe introduced the bond note towards the end of 2016 as part of its desperate bid to address the country’s severe cash and liquidity crisis — all this under a special arrangement with Afrexim Bank.

However, the country has remained in the grip of a ginormous economic crisis characterised by endless cash queues and the acute foreign currency shortages.

Despite Zimbabwe having a decent tobacco season, as well as having significantly improved its gold sales, the RBZ has not been able to allocate adequate foreign currency to key sectors of the economy.

This led to the increase of prices for basic commodities.

However, Mangudya said the current inflation has nothing to do with bond notes but is caused by fiscal imbalances. — Don’t miss the full Question and Answer interview with Gumbo in the Daily News on Sunday. DailyNews