Energy Minister Fortune Chasi and central bank governor John Mangudya have said that foreign fuel suppliers are now demanding cash up front when purchasing fuel since Zimbabwe owes them US$200 million. This is said to have exacerbated the challenges associated with the importation of fuel.
Speaking before the Parliamentary Committee on Thursday, Mangudya said:
Fuel queues are an eyesore, we don’t want to see them. The fuel situation is a symptom of a bigger problem in the economy.
The scarcity of foreign currency has made it difficult for local oil to pay for fuel upfront. Resultantly, the central bank is forced to write a letter of credit to foreign suppliers on behalf of local importers guaranteeing that payment will be made for fuel supplies. Mangudya said the central bank had in the past two weeks issued US$115 million in letters of credit to oil companies to import 170 million litres of fuel, enough to last just over a month.
Companies which supply Zimbabwe with oil, Glencore, Total and Trafigura, Engen and Independent Petroleum Group still ship fuel to Zimbabwe but keep it in bonded storage on the outskirts of the capital Harare until they have been paid in US dollars.
More: Newz Wire