Source: Govt to tighten fuel regulatory framework | The Herald 09 MAR, 2020
Golden Sibanda Senior Business Reporter
Government can now tighten the regulatory framework for the fuel industry to curtail holding of fuel for speculative reasons after the Reserve Bank of Zimbabwe (RBZ) announced last week that it will be publishing amount of money availed for the procurement of fuel to be sold in local currency.
Energy and Power Development Minister Fortune Chasi, said the new approach by the central bank would close information gaps between the bank, petroleum firms and the industry regulator, which were being abused.
Minister Chasi told Herald Finance and Business in an interview that part of the challenges authorities had monitoring the conduct of players was information asymmetry, which has prompted the Reserve Bank of Zimbabwe (RBZ) to make the decision to publicise the fuel facilities every week.
This comes after RBZ governor Dr John Mangudya last week said starting this month, he will publish facilities for fuel importation as well as the list of petroleum firms benefitting from its arrangements, including details on how much each of the firms would be getting.
So far, Dr Mangudya said he had earmarked US$120 million for fuel imports to be administered by banks with help from the central bank, while US$18,47 million has been made immediately available for draw-downs under Letters of Credit from Msasa fuel deport.
Dr Mangudya said the allocation by the bank for March, enough to pay for around 200 000 million litres was more than enough to procure adequate fuel to meet the national demand. Ordinarily, Zimbabwe requires about US$100 million to import enough fuel to last a whole month.
However, Minister Chasi said some petroleum companies may be speculating with the fuel procured with resources supplied by the State, under formal arrangements such as the interbank market or allocations to the industry by the central bank.
“For the information and benefit of the public the Reserve Bank of Zimbabwe is pleased to advise that it shall henceforth, on a weekly basis, publish the status of the fuel finance facilities available to the oil marketing companies for the procurement of fuel for sell to the public in local currency,” he said.
The latest approach by RBZ comes amid acute nationwide shortages of fuel, which is reflected through long winding queues of motorists. This has seen business and the public falling prey to extortionate pricing by opportunists like transport operators, while affecting industrial and commercial activities.
Minister Chasi said the new approach will enable the Zimbabwe Energy Regulatory Authority, the regulatory arm of the Government to put in place effective monitoring tools to curtail holding of fuel for speculative reasons.
This also comes hot in the heels of revelations that the Zimbabwe Anti-corruption Commission (ZACC) will investigate fuel dealers suspected to have received fuel but withheld the commodity hoping authorities would give in to their demands for a review of regulated price margins.
Minister Chasi said when operating in an environment where there is opacity of information, it become unclear whether the fuel being supplied to the market is doing what it should amid the chronic crippling shortages.
The energy minister expressed fears a lot of the fuel meant for the general local currency market could be getting lost to some unintended purpose that benefit a few individuals.
“Now we are inching towards a much more reflective situation regarding actual consumption. As Government, we will continue to monitor the situation and put in place measures that draw us closer to ensuring that we are not wasting foreign currency on individuals who want to speculate.
“We want to make foreign currency to people who want to engage in this business as legitimate business people who also have the national interest at heart,” Minister Chasi said.
Dr Mangudya also said fuel under the Direct Fuel Imports (DFI) framework, to be sold in foreign currency, will augment supplies procured from allocations made to oil marketers for sale in local currency.