AN investigation by the Zimbabwe Energy Regulatory Authority (ZERA) has unearthed “massive abuse” of the Zimbabwean dollar fuel facility by oil marketers that insist on US dollar payments despite accessing foreign currency on the auction market.
There are huge discrepancies between forex allocated to import fuel and supply of the commodity in local currency on the market, the regulator said.
Market watchers believe that allowing the anomaly to continue would undermine the local currency, given the impact of the fuel sector on the economy.
“There has been massive abuse of the RTGS fuel facility by some oil companies,” said ZERA chief executive officer Mr Edington Mazambani.
“The amount of funds allocated for fuel imports does not reconcile with RTGS fuel available on the market. Some matters have been referred to the Zimbabwe Revenue Authority (ZIMRA), the Reserve Bank of Zimbabwe (RBZ) and police.”
Fuel companies that use their own free funds to import fuel are allowed to sell in foreign currency under the Direct Fuel Import (DFI) scheme. In the event a company is using both facilities, the fuel purchased through funds from the auction should be sold in local currency. RBZ Governor Dr John Mangudya said the central bank was working with ZERA on the matter.
“We are seized with the matter together with ZERA … We have provided information on the allocations and as the regulator, ZERA would know how to deal with the alleged offenders,” he said.
ZIMRA spokesperson Mr Francis Chamanda declined to comment, saying tax issues were treated as confidential.
At the last auction, the local unit traded at $86.3: US$1. The auction market — largely credited for stabilising the exchange rate and slowing the inflation rate — was introduced on June 23 last year. Over US$1,7 billion has been disbursed to over 4 000 companies since then. Consumables, including fuel, account for 40 percent of the total disbursements to date.
Had oil firms not been abusing the RTGS fuel facility, petrol procured with funds sourced on the official market would be selling for about $118 per litre (US$1,38), while diesel would be selling at about $115 (US$1,34).
With scarcity of the United States dollars, which trades at around $150 on the parallel market, one would need $90 more to buy US dollars for a litre of petrol and $86 for diesel.
But the abuse of funds from the auction seem to have become pervasive following similar reports that some manufacturers and retailers are openly insisting on US dollar payments, while others are pegging Zimbabwe dollar prices to outrageously high exchange rates to force consumers to pay in hard currency.
Economic analysts say there is no reason why oil companies should insist on United States dollar payments when they are getting foreign currency on the official market.
“They are a major player in the economy. They have no reason not to accept Zimbabwean dollar payments since they are getting foreign currency at an official rate.”
Zimbabwe’s economic fundamentals are understood to be strong considering great output from agriculture, manufacturing and mining.