By Grace Chekai
Indigenous Petroleum Association of Zimbabwe (IPAZ) has requested the Government through Reserve Bank of Zimbabwe (R.B.Z) to increase the threshold for Letters of Credit (LCs) which they are allocated as a group.
IPAZ, which has 77 members, wants the LC threshold to be increased from the current US $1 million to between US $5 to US $10 million per applicant.
A source within IPAZ said that members operate a total of 289 fuel Service Stations countrywide adding that if they get significant fuel currency allocation, Association will have a capacity to eradicate fuel shortages on the local market.
The source said Zimbabwe Energy Regulatory Authority’s (ZERA) 12 March 2020 General Licence Notice, which states that for any fuel procurement applicant to be considered, they must have a minimum of 25 service stations, virtually excludes IPAZ members who cannot meet this requirement.
The source said that over 126 fuel procurement licences were issued in 2019 but only eight were effectively used to secure fuel for the local market. He said the others were used for speculative purposes.
He said that IPAZ was importing fuel through a company called Praise.
Government is of the view that fuel procurement licences should be reduced in order to have greater control of the procurement systems.
According to a member of IPAZ, “It is important for Government to create an environment where local business can grow and become big players in fuel procurement.”
He said IPAZ must apply for fuel procurement licenses under an umbrella group.
The source said that most IPAZ members were currently selling fuel in foreign currency claiming that they were Direct Fuel Imports (DFI).
IPAZ, however, indicated that if the LCs are increased, they would not be interested in the DFI facilities being offered by ZERA.
ZIMRA issued a public notice 12/2020 as a follow up of Statutory Instrument (S.I) 161/2019 which back dates duty in foreign currency on the local market as DFI fuel.
IPAZ highlighted that it was ready to engage the Ministry of Energy and Power Development and ZERA officials whom they accuse of side-lining its members in favour of big oil companies.
However, an analyst advised Government to give IPAZ support in a systematic way to ensure that those companies remain in business but at the same time apply good business practices.
Analyst say members of IPAZ have been fingered in fuel malpractices such as illegal foreign exchange sales, fuel adulteration and hoarding.
Supporting IPAZ would help in improving the supply of fuel on the local market.
