By Farirai Machivenyika
Reserve Bank of Zimbabwe (RBZ) Governor Dr John Mangudya yesterday said it had doubled foreign currency allocation to fuel suppliers from $10 million to $20 million per week to ensure constant fuel supplies.
He attributed fuel shortages, which the country experienced last week, to rising oil prices on the world market and structural challenges in the economy that have spawned foreign currency shortages.
“We have discussed with the Ministry of Energy and Power Development and Zimbabwe Energy Regulatory Authority that we now need to allocate $20 million on a weekly basis between using direct allocations, letters of credit and also facilities.
“We do believe that the country is facing challenges which have to do with supply and demand of foreign currency. The supply of foreign currency (low) is due to the pressures this economy is growing through,” Dr Mangudya said.
He said the country was facing structural challenges that include low lines of credit, a huge debt overhang, disruptions in the supply of ethanol due to seasonal changes and rising oil prices on the world market.
Prices of oil have gone up from around $47 a barrel in June last year to $80 for the same amount as of last week.
“We do believe that the policy thrust which we are pursuing which is geared towards sustainability to stabilise the economy is the best strategy restoring the economy. We believe that the economy needs to have an export oriented base, we need to create more exports, create more foreign currency,” he added.
He however, bemoaned alarmist statements circulating on social media for fueling shortages by encouraging panic buying.
Dr Mangudya added that they had projected the country would need approximately $650 million to procure fuel up to the end of the year.
He also commended fuel companies that had assisted Government in providing lines of credit to procure fuel.
Meanwhile, permanent secretary in the Ministry of Energy and Power Development, Mr Patson Mbiriri was taken to task over Government’s failure to establish storage facilities for ethanol to avoid disruptions due to seasonal changes in sugar cane production.
The market is facing a shortage of ethanol for blending because of the low supply from Chisumbanje and Triangle, the two major suppliers.
Mr Mbiriri however, said Government was constructing storage facilities in Harare to avert shortages of ethanol in future.