Parallel fuel market thriving

Fuel supplies remain critical in Zimbabwe, forcing motorists, business and industry to rely on the parallel market if they want to stay mobile. The government liberalised the fuel sector last year, allowing individuals and private companies with free funds to source their own petrol/diesel for sale, and in July this year, government announced the sale of fuel for hard foreign currency. However, informal surveys carried out by IRIN revealed that the scarcity of fuel and foreign currency had negatively impacted on both these attempts to address the crisis. "The bottom line is that there is no foreign currency and the situation is extremely bad," said Rodrick Kusona, a spokesman for the Petroleum Marketers Association of Zimbabwe (PMAZ). The Harare city council recently admitted that it was procuring fuel on the parallel market because it could not obtain any from the government-run National Oil Company of Zimbabwe (Noczim), its traditional supplier. Harare municipality town clerk Nomutsa Chideya told a parliamentary portfolio committee on local government last week that the council had resorted to buying fuel illegally to enable it to respond to emergencies. "We are not able to attend to any sewerage or water pipe bursts because all our vehicles are grounded. For the sake of the health of the residents, we would rather buy the fuel on the parallel market - we will face the consequences later," he explained. Chideya said the council used to receive a quota of 30,000 litres of fuel every month, but this had gone down to 10,000 litres before supplies were completely discontinued. Noczim, the sole procurer of fuel before the liberalisation moves, cited the critical shortage of foreign currency as the main reason for being unable to supply government departments with adequate quantities of fuel. The parastatal has also told farmers that it would no longer be able allocate fuel to them, throwing preparations for the main farming season - less than a month away - into disarray. Meanwhile, farm produce has been rotting at roadsides because farmers could not get the fuel to transport it to market. Service stations designated by the Reserve Bank of Zimbabwe to sell fuel in foreign currency have an ample supply, but they are few in number - Harare has only two - where fuel can be bought with coupons obtained from Reserve Bank outlets. A fuel coupon sells for US$1 a litre for both diesel and petrol. The official exchange rate is now pegged at Zim $26,000 to the dollar. Most service stations, which trade in the local currency, fail to acquire a regular supply of fuel. But petrol and diesel are readily available on the parallel market. "It is indeed mysterious why fuel can be found easily on the parallel market. However, there is a possibility that private players are the ones who are fuelling the black market by buying and instead going to official selling points, seek to maximise their profits by selling on the informal market," said Kusano. "But the practice would be difficult to curb because these people are using their own money," he pointed out. IRIN discovered that some individuals with access to foreign currency were buying fuel coupons and reselling them on the parallel market at four times the official price. Noczim staff have also been implicated in the under-the-counter sale of fuel: the state procurer recently acknowledged in a statement that the police had arrested five employees who had "prejudiced the company of millions of dollars worth of petrol and diesel" by allegedly stealing and selling it on the parallel market. "Such actions not only derail efforts of ensuring that the scarce fuel products are equitably and fairly distributed throughout the country, but also tend to promote the parallel market trade of the commodity," stated Noczim.