ENERGY: Fuel Shortages Hurt Zimbabwe

By IPS Correspondents Reprint | | Print |

Lewis Machipisa

HARARE, Dec 2 2002 (IPS) - Queues of up to one kilometre have resurfaced in the Zimbabwean capital Harare as desperate motorists jump from one petrol station to the other in search of the scarce commodity. But many still go empty-handed.

President Robert Mugabe, admitting his government has failed to provide fuel to meet the country’s needs, says private companies will now be allowed to import the commodity.

The state-owned National Oil Company of Zimbabwe (Noczim) has monopolised fuel import for 22 years.

Shortages of fuel have been occurring since 1999, sparked by lack of foreign currency to import the commodity.

The current shortages have been caused by the collapse of an oil-supply deal with Libya over non-payment by Harare.

Early November, president Mugabe said the fuel problems were causing him and his ministers ”headaches”, an occurrence he no longer wanted.

The 360-U.S.-million-dollar line of credit with Libya was signed by President Mugabe and his Libyan counterpart, Muammar Gadhafi, three months ago and was supposed to assure Zimbabwe of fuel for 12 months.

At their height, the state-owned Libyan oil company Tamoil provided three-quarters of the country’s fuel needs.

But, with a dislocated and crumbling economy, there is simply no money to pay the Libyans or anyone for that matter. As a result, the Libyans have turned off the taps, demanding money up-front.

Tamoil, which is based in Monaco, France, is owned 55 percent by Europoil Netherlands BV, a private consortium, and 45 percent by Libya’s state-owned National Oil Corporation.

”There is some fuel in the country from Libya but it still belongs to the Libyans. The Libyans want money up-front before switching the taps. But this will not happen without any money,” says local economist John Robertson.

The government has blamed transport companies for the long queues. ”It is a distribution problem, but Noczim is looking into it,” the Minister of Energy, Amos Midzi, was quoted by ”The Herald” newspaper as saying on Monday.

An analyst, who opted for anonymity, says the fuel that is available in Zimbabwe will be distributed to 17 new indigenous fuel distribution companies, recently set-up. They will receive 75 percent of the fuel if they can pay for it, he says.

The 17 companies – which are 11 times more in number than the six traditional multinational fuel distributors – share between them a mere 10 percent of the fuel stations operating in the country.

For the companies to bring in fuel, they need foreign currency, which is not available officially. At the parallel market, one U.S. dollar fetches up to 1,500 Zimbabwe dollars, while at the official market it fetches a paltry 55 Zimbabwe dollars.

For the companies to make profit, they need to sell one litre of fuel for 2,000 Zimbabwe dollars (36 U.S. dollars at the official rate), simply unaffordable. One litre of petrol costs 1.40 U.S. dollars at the official rate. In the absence of a resumption of a balance-of-payment support from the International Monetary Fund (IMF), injecting the badly needed foreign currency, and a government unable to attract investors and keep them, the fuel situation is set to worsen.

The IMF stopped balance-of-payment support three years ago over non-compliance of agreed policies by Harare.

With the persistence fuel shortages, industry, which already is performing at well below 60 percent of its capacity, will grind to a halt.

Scarcity has become the order of the day in Zimbabwe, where nearly six million people – out of the country’s 13 million population – need urgent food aid.

Earlier this month, the government extended the price freeze to cover fuel, newspapers and building material. This is likely to further inflict harm on companies that use inputs – the prices of which are not controlled. The Confederation of Zimbabwe Industries (CZI) says at least 1500 companies have closed in the past two years.

Interconnected with shortages is Zimbabwe’s inflation nightmare.

Government puts inflation at 144.2 percent, while private economists peg the figure at a minimum of 200 percent.