When Zimbabwe converted to the use of foreign currency for all domestic transactions, the import fuel system was liberalised and price controls lifted.
This resulted in an immediate resumption of normal supplies and in a few weeks all informal fuel sales were suspended.
In the past three months restrictions have again been imposed on import permits resulting in a resumption of the effective monopoly over fuel supplies going back to NOCZIM.
However because NOCZIM has no credibility in international or even regional markets its operations had to be in hard cash.
This was no problem as the local trade simply lodged cash up front with the company and it then used these funds to purchase bulk supplies.
However the temptation of many millions of dollars (about US$1,5 million a day) flowing through the accounts of NOCZIM was just to much for the elements in the administration and NOCZIM and sometime in the past four months a very large sum of money was taken out of the NOCZIM accounts and NOCZIM failed to deliver millions of litres of fuel, already paid for, to local clients.
These clients then halted payments to NOCZIM and had to try and fill the resulting void with supplies from South Africa by road.
There is more to this story than just these bald facts but this is the basic reason for the shortages. Just to show how serious the effect has been, this weekend some dealers have been charging up to US$2 per litre in Bulawayo for diesel – the fuel most affected.
Meetings have been held with the fuel majors and the Prime Ministers office is now following this up with a number of targeted measures.
Among the actions being taken are the complete scrapping of import permits for fuel, allowing the fuel majors to buy fuel in bulk and bring it into the country via the pipeline as well as sorting out the multitude of import duties and charges that are being levied and which are distorting prices and import arrangements.
These measures will have the effect of marginalizing NOCZIM and allowing the private sector to take over fuel imports and local distribution. This should bring the situation back to normal in a few days.
